According to a Bloomberg report, Elon Musk’s net worth is now $96 billion. He has become the fourth wealthiest person in the world, and he is about to get a lot wealthier.
Musk does not take a regular salary. In 2018, shareholders approved a pay package that would give him 20.3 million stock options, paid in 12 equal tranches. With the tremendous gain in Tesla shares, he has qualified for two blocks of options. These are worth about $2.8 billion each after he pays the exercise price.
Musk to be awarded options as soon as Tesla hits a series of targets
The Tesla founder is weeks away from qualifying for the third block of options, worth an additional $2.8 billion.
These options will be awarded to Musk as the company hits a series of targets both for financial value and market value. The Tesla shares valued at $372 billion on Monday’s close, must maintain a $200 billion average market value over six months. So, even if they lose nearly half of their current value over the next month, they will still have a six-month average of $200 billion or more.
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Also, Tesla should maintain its profit performance. As per analysts’ forecast, Tesla will be able to do it in the current quarter. Its third-quarter forecast is for earnings of about $1.4 billion. It is up by about a third of what they earned a year ago.
Owner of 34 million shares, equal to 18% stake in the company
If the company is successful in hitting these targets, Musk will get his options this year. He won’t own the shares. He has yet to exercise the options received and these can be exercised only when he is ready to sell the shares, or if they are due to expire. These options that Musk will receive this year, will be only a fraction of his current Tesla stockholding.
Currently, he owns 34 million shares of the stock, a stake equal to 18% of the company. It is valued at $68 billion.
Tesla to execute a five-to-one stock split, but no change to the value of Musk’s holdings
Musk qualified for the first block of options, worth $770 million in May. He qualified for the second block earlier this month when the company’s stock price lifted the value of the block of option to $2.1 billion. The earlier two blocks of options were worth $5.6 billion and the next block would be worth $2.8 billion, at current prices.
Tesla will now execute a five-to-one stock split. This split will change the total number of shares and options held and outstanding, but it won’t change the value of Musk’s holdings.