Tesla CEO Elon Musk qualified on Tuesday for a payout worth an unprecedented $2.1 billion, his second jackpot since May from the electric car maker following its massive stock surge.
Tesla’s closed Tuesday’s trading down 4.5 per cent, eroding a recent rally that has elevated the company’s market capitalization to almost $300 billion, larger than any other carmaker.
Despite Tuesday’s stock dip, and importantly for Musk’s personal finances, Tesla’s six-month average market capitalization for the first time has reached $150 billion.
That triggers the vesting of the second of 12 levels of options granted to the billionaire in his 2018 pay package to buy Tesla stock at a discount.
Musk, who is also the majority owner and CEO of the SpaceX rocket maker, receives no salary.
Even with Tuesday’s decline in Tesla’s stock, its six-month average market capitalization rose, thanks to the stock’s strong rally in recent months.
In early May, Musk’s first level vested after Tesla’s six-month average stock market value reached $100 billion.
Musk has already achieved targets related to Tesla’s financial growth that is also required in order to vest the latest options.
Each level gives Musk the option to buy 1.69 million Tesla shares at $350.02 each, less than a quarter of their current price.
At Tesla’s current stock price of $1,594, Musk would theoretically be able to sell the shares related to the tranche that vested in May and the current tranche for a combined profit of $4.2 billion, or almost $2.1 billion per level.
Musk’s first level was worth about $700 million in May when it vested, but its value has since increased along with Tesla’s stock price.
The median compensation for Tesla employees last year was about $58,000, according to a company filing.
Tesla’s stock has surged more than 500 per cent over the past year as the company increased sales of its Model 3 sedan.
Following higher-than-expected second-quarter vehicle deliveries, some investors believe Tesla might report a profit in its second-quarter report on Wednesday after the bell.
That would mark four consecutive profitable quarters, a first for Tesla and a key hurdle for it to be added to the S&P 500 index.
Analysts on average expect a $240 million loss for the quarter, according to Refinitiv. A month ago, analysts expected a loss of almost $340 million.