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Elon Musk unlocks $2.1B stock award as Tesla reaches new milestone

Elon Musk unlocks $2.1B stock award as Tesla reaches new milestone
Elon Musk unlocks $2.1B stock award as Tesla reaches new milestone

Dubbed as a real-life Tony Stark, Chief Executive Officer of Tesla Inc, Elon Musk has reportedly unlocked the second tranche of his USD55 billion bonus package following Tesla's average market value over last six months increased above USD 150 billion on Tuesday.

This allows Musk to gain an additional USD2.1 billion through a newly introduced 1.69 million stock options. However, for this to happen, he must wait at least five years to sell them.

The pay package approved by shareholders in 2018 gives Musk access to 20.3 million shares, divided into 12 parts of 1.69 million shares each. With this package, the founder could generate around 55 billion dollars if the goals are met, Tesla estimates.

Hence, Musk has the power to purchase 1.69 million shares at a discounted price of $350.02 per action, whenever the electric car manufacturer achieves a specific milestone in terms of market cap, revenues, and adjusted profit. 

If Musk immediately sells the shares of the company at a current price, he would make $2.1 billion of profit. However, Musk must get approval from the Tesla board to make this award official.

The CEO unlocked the first tranche of the award in May when Tesla reached an average market value of USD 100 billion for six months. Since then, the company's share is more than twice and crossed Toyota Motor Corp., Volkswagen AG, and Hyundai Motor Co.

In New York trade Tuesday, Tesla shares dropped 4.5 percent to USD 1,568.36, which equals 275 percent of this year's share gain.

Tesla must achieve an average market capitalization of USD 200 billion for six months, and an adjusted profit before interest, taxes, depreciation, and amortization of either USD 35 billion or USD 3 billion post revenue over four consecutive quarter to unlock the third tranche.

Source Credit - https://techcrunch.com/2020/07/21/elon-musk-is-one-board-approval-away-from-another-2-1-billion-in-stock-options/