Tesla authorized that CEO Elon Musk earned the first tranche of his massive incentive payout, in a document filed with the Custodianships and Exchange Commission on Thursday.
The tranche is comprised of about 1.7 million shares of Tesla, and would be valued on all sides of $775 million based on Thursday’s closing market value. Shares in Tesla closed at $805.81 on Thursday, and the privileges have a strike price of $350.02.
Thursday’s filing, which also set a date of July 7 for the company’s annual shareholders get-together, said:
“As of the date of this proxy statement, one of the 12 tranches under this award has vested and become exercisable, gist to Mr. Musk’s payment of the exercise price of $350.02 per share and the minimum five-year holding period generally applicable to any portions he acquires upon exercise.” It is not clear if Musk has yet exercised the options.
Musk earned the first portion of his stock options for hold in check the company’s market capitalization at $100 billion on a 30-day and six-month trailing average.
According to a 2018 regulatory register outlining the conditions for the payout, Tesla also had to hit trailing-four-quarter revenue of $20 billion or EBITDA (minus stock-based compensation) of $1.5 billion for Musk to get the tranche.
Musk does not select a salary at this point. He owned about 18.5% of the company as of May 1, according to FactSet, a stake worth all about $24 billion. By Thursday, the proxy filing revealed, Musk’s stake in the company had risen to 20.8% — a total of 38.7 million helpings, including 18.5 million used as collateral for the CEO’s personal debt. His full award is set to vest over 12 tranches with varied milestone requirements, reaching up to $650 billion in market capitalization for Tesla.
Tesla stockholder Richard Tornetta is impugning the compensation plan in a lawsuit against Musk and members of Tesla’s board. Tornetta alleged in the lawsuit that Tesla’s embark on breached its fiduciary duty by awarding Musk excessive compensation.
Tesla was forced to restrict its operations during the coronavirus pandemic, to Musk’s frustration. On Tesla’s first-quarter analyst order, Musk called stay-at-home orders meant to slow the spread of the virus “fascist.”
In March, the company wound down to least basic operations at its Fremont, California, electric vehicle assembly plant after the county said it was not considered an necessary business authorized to work during the Covid-19 health orders.
In early May, just before Tesla reopened the car assign, Tesla shares tumbled more than 10% in a single day when Musk tweeted that the stock price was “too strong,” but the shares have since recovered that loss, and then some.
Musk previously agreed, as part of a arbitration with the SEC, to submit public statements about Tesla’s finances for vetting by legal counsel before sharing them. The SEC initially sued Musk and Tesla after the CEO tweeted, without betraying evidence, that he had secured funding to take Tesla private at $420 per share.
After The Wall Street Catalogue asked Musk if his more recent tweet about Tesla’s share price was a joke or was vetted, Musk mean, “No.” The SEC declined to comment on the tweet, and whether it meant that Musk had violated their agreement.
Tesla reopened its Fremont secret agent the weekend of May 9, in defiance of local health orders with no consequences.
WATCH: Elon Musk says stay-at-home orders ‘fascist’ in expletive-laced rhetoric during Tesla earnings call