Tesla has consistently had a market capitalization of $ 150 billion over the past six months. This makes Elon Musk (if the board approves) eligible to cash in the second of a series of 12 share option payments.
Yesterday, the price of Tesla shares (TSLA) was $ 1.568,36 (-4,54%), while it rose 1,32% in the pre-market to $ 1,588,99 today. Tesla's share price hit this key target shortly before the announcement of the second quarter results expected to be released today.
Elon Musk does not receive a salary from Tesla. In 2018, Tesla shareholders (TSLA) approved a compensation package based on the results achieved.
Elon Musk will soon receive a new stock options award
The remuneration package is made up of 20,3 million stock options. Payment of stock options has 12 tranches. the tranches are paid according to the objectives achieved. If a milestone is reached, the Tesla commission must approve its compensation package.
Elon Musk is eligible to purchase Tesla (TSLA) shares at a discount of $ 350,02. It can then sell the stock with a clear difference. The problem is that he has a five-year window for doing so. According to the numbers, Elon Musk is online to receive options worth around $ 2,1 billion.
Tesla's board of directors has approved the first tranche of May. This occurred after Tesla's stock market capitalization (TSLA) was over $ 100 billion for six months. At present, Elon Musk is entitled to receive shares worth $ 4,2 billion.
Such a payment strategy keeps the CEO focused on achieving the goals he has said he wants to do. In addition, it helps to increase share prices thanks to the results achieved. Only after the CEO has done his job is he paid.
Disadvantages of performance-based pay
This approach also has its drawbacks. CEOs can only focus on achieving these goals rather than advancing the company in all aspects. Many are concerned that this is what is happening to Tesla.
The point is that TSLA stock prices are too high. Critics think Tesla has yet to reach that kind of value that can guarantee such a rise in stock prices. They compare Tesla (TSLA) with other market leaders who have an almost zero movement in prices.
They think Tesla stock prices (TSLA) are driven by the popularity of its CEO. Tesla is definitely a leader in his field globally. Its technology is second to none.
Its innovation curve is so high that many automakers cannot compete. Then there is also brand loyalty. In the end, Tesla could become one of those companies that continue to grow thanks to innovation. And to a superstar CEO!
