Elon Musk Poised for $2.1 Billion Tesla Stock Option Windfall
Tesla CEO Elon Musk is one board approval away from unlocking another massive stock option payout worth approximately $2.1 billion, marking the second major milestone in his unprecedented 2018 compensation package.
The Trigger: Tesla’s Soaring Market Cap
On Tuesday, Tesla achieved a critical financial benchmark:
- 6-month average trailing market capitalization reached $150 billion
- This follows a 4-month surge in Tesla’s stock price
- The milestone qualifies Musk for the second tranche of his 12-tier compensation plan
Note: The Tesla board must still officially certify this achievement before the options vest.
Understanding Musk’s Compensation Package
The groundbreaking 2018 shareholder-approved plan includes:
- 20.3 million stock options divided into 12 tranches
- Each tranche represents 1.69 million shares
- Vesting requires hitting specific market cap, revenue, and EBITDA targets
Current opportunity:
- Exercise price: $350.02/share (91% discount to current ~$1,568 trading price)
- Potential gross profit: $2.1 billion on this tranche alone
- Combined with May’s first tranche: $4.2 billion total potential profit
Important restriction: Musk must hold any exercised shares for at least five years.
The Path to Musk’s Next Payday
To unlock this second tranche, Tesla needed to achieve:
- $150 billion 6-month average market cap (achieved)
- Plus either:
- $35 billion annual revenue OR
- $3 billion adjusted EBITDA
Looking Ahead: The Next Milestone
The third tranche requires:
- $200 billion 6-month average market cap
- Plus either:
- $55 billion revenue OR
- $4.5 billion adjusted EBITDA
Key Context
- Musk hasn’t exercised any options from the first tranche (SEC filings confirm)
- This compensation plan directly ties Musk’s rewards to Tesla’s market performance
- The timing coincides with Tesla’s Q2 earnings announcement
Market Watch: Tesla’s continued growth could see Musk unlocking additional tranches in the coming months, making this one of the most ambitious—and lucrative—CEO compensation plans in corporate history.
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