Elon Musk, the chief executive officer of Tesla, has only about six milestones left to accomplish before he receives a $1.4 billion windfall. This was revealed in a proxy statement that was filed on Thursday. In 2012 Musk received stock options totaling 5.27 million that were tied to market value targets as well as operational targets. Musk has never received a nominal salary.
So far Musk has accomplished 60% of the ten operational goals that had been set which is an improvements from the figure of 50% at a time like this last year. With regards to market value targets, Tesla has accomplished 80% of the milestones. At a time like this last year, the electric carmaker had achieved 70% of those milestones.
For the payout to be triggered, Musk has five years left until 2022 to attain those goals. However, if the goals are achieved earlier, cashing in the options could be done ahead of schedule. At the close of the markets on Thursday, those options were worth approximately $1.4 billion based on a per unit share price of $302.51.
Model 3 hopes
Each time the electric carmaker accomplishes two goals – one operational target and one market value target, the chief executive officer of Tesla is able to earn 10% of the options.
In quarter one of this year, 25,000 vehicles were delivered by Tesla and this helped the company exceed the aggregate number of its produced vehicles to above 200,000. However, the milestone will only be considered to have been achieved when the board of directors of Tesla has made a confirmation of the number.
Once production of the Model 3 begins later in July, Tesla expects the annual output to rise to approximately half a million cars by 2018. The Model 3 will be a mass-market vehicle and will thus attract a lot more buyers than any other Tesla model.
Besides hitting the production targets, another target for Musk involves maintaining a 30% gross margin for at least 4 straight quarters. In the last four quarters, Tesla’s gross margin has ranged between 19% and 28%.
Additionally, the market value of Tesla must stay above $43.2 billion for a period of at least half a year. This translates to a unit price of $270 a share. Currently, the market cap of Tesla is $49.3 billion. Earlier in the month, the electric car maker’s market cap temporarily surpassed that of General Motors.