Tesla Inc. TSLA Chief Executive Officer Elon Musk unlocked the second tranche of options, worth $2.1 billion, on Tuesday as the automaker reaches $150 million in a six-month average trailing market capitalization, Bloomberg reported.
Musk’s compensation plan gives him $20.3 million stock option awards, divided into 12 tranches of 1.69 million shares each.
Each time the electric vehicle maker hits a certain milestone in terms of market cap, revenue, and adjusted earnings, Musk is allowed to purchase 1.69 million shares at the discounted price fo $350.02 per share. The Tesla board must also grant approval before an award becomes official.
It is estimated that at the prevailing stock price of $1,568.36, Musk could theoretically sell his shares for about $2.1 billion. However, the tranche is locked for five years and thus the entrepreneur can't immediately sell these shares, Bloomberg noted.
Why It Matters
The electric vehicle maker has enjoyed a months-long rise in its share price, which has made Musk and Tesla employees considerably wealthier.
Musk's compensation is the largest corporate payment package between a CEO and a company’s board, according to Bloomberg.
The Tesla CEO unlocked the first tranche in May, which was valued at over $700 million at the time. The next tranche would be vested when Tesla reaches a six-month average market capitalization of $200 billion or meets other milestones related to revenue, as per the 2018 compensation plan.
Musk is the world’s ninth-richest person, as per the Bloomberg Billionaire’s Index, with the top spot going to Amazon.com, Inc AMZN CEO Jeff Bezos, who added a record $13 billion to his wealth in a single day earlier this week.
Tesla shares closed 4.5% lower at $1,568.36 on Tuesday, and traded 0.7% higher in the after-hours session.
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