On Wednesday (Jan. 22), Tesla’s market cap. closed above $100 billion for the first time, driving its CEO Elon Musk for a huge payout.
The shares of Tesla shot up by more than 8% in the Wednesday intra-day trading, which sent the market cap to more than $107 billion before the stock lost some of its gains to finish the day up 4% with a market cap of $102.7 billion.
Elon Musk is expected to take home a lot more money because of the increase in Telsa's stock price. A compensation plan approved for Musks by shareholders and the Telsa board in 2018. The compensation allows him to earn options worth more than $55 billion over the next decade. Provided that the market cap. of Telsa hits and stays at $100 billion, Elon Musk would earn the first tranche of at least $346 million in options. Currently, Musk reportedly draws no salary, though he owns about 20% of the company.
Reports from a regulatory filing shows that for Musk to earn the payout, he must keep the company’s market cap above $100 billion long enough to sustain that level on both a 30-day and six-month trailing average. It further says the company must also, hit an annual revenue or EBITDA milestones at the same time and would need to report either the trailing four-quarter revenue of $20 billion or EBITDA (minus stock-based compensation) of $1.5 billion for Musk to get the first tranche.
Telsa's Strong fourth-quarter rally
Telsa's shares have been up by more than 30% since the new year began, and has also rallied since it reported its third-quarter earnings on Oct. 23, 2019. That day, the shares closed at $250 before the earnings were released, and then climbed to about $300 following extended trading. The company then announced a surprise profit. Telsa has continued to advance on its entry into China and its fourth-quarter delivery figures exceeded the expectations of Wall Street.
The Telsa factory at Shanghai was open ahead of time and also began delivery of its Model 3 sedan in China at the end of 2019. The company disclosed that it was boosting vehicle production at the Shanghai factory to more than 1,000 vehicles per week. The company also plans to build another factory (that is the fourth) in Germany, despite the backlash faced by the company over environmental concerns.
Since the beginning of 2020, Telsa investors have been impressed by the activities of the company following strong numbers of delivery for the fourth-quarter. Telsa has reportedly impressed investors since the start of the new year, with its strong delivery numbers. The company reportedly delivered 112,000 vehicles in the last quarter of 2019, increasing the total number of delivered vehicles of 2019 to approximately 367,500. The figure is a 50% increment over that of 2018.
After the close of trading on Jan. 29, Telsa is expected to report its fourth-quarter earnings.