Elon Musk is already one of the richest people in the world, but he's soon about to add boatloads of cash to his coffers.
With help from a soaring Tesla stock, Musk could net $600 million in new stock from the company's board of directors, Forbes reported on Monday. The stock would be awarded as part of a compensation package Musk has with Tesla that's tied to his performance.
That package, which has 12 components with a maximum possible value of $55 billion, is tied to shareholder value. The first component, which Forbes cited, allows Musk to get 1.69 million Tesla shares if the company's trailing six-month and 30-day market cap averages $100 billion. As long as Tesla doesn't take a major hit in the next week or so, sometime in early May, the stock should reach those levels, triggering Musk's stock windfall.
The timing on this is nothing if not odd, coming as it does when the world's economy is buckling under the pressure of coronavirus. Tens of millions of Americans are out of work, and Tesla itself has said that it needed to renegotiate leases and furlough employees to maintain its business. There's no telling when the economy will begin to turn around.
Through all of that, however, Tesla's stock has soared, currently trading at $783, a significant increase from its 52-week low of $176.99 in 2019.
Like all public company CEOs, Musk's pay is tied to corporate performance. But his compensation package may be one of the most aggressive in the industry. It provides Musk with significant returns if and only if he can actually increase the company's market capitalization. After hitting the $100 billion hurdle he's about to hit now, for instance, it quickly extends to $150 billion and more. If Musk can grow the business to a $650 billion market cap, he'd have earned more than 20 million new shares in the company. At that point, given its current stock price, it's hard to say how many billions of dollars that would be worth at that time.
But alas, there are real questions over whether Musk's continued success at Tesla is sustainable. The company is a leader in electric cars with major automakers targeting its market. And with the economy in shambles, it's hard to say whether shoppers will be ready and willing to buy new electric cars at any point in the coming months.
For now, though, things are going well for Musk. Just ask his banker.