Tesla CEO Elon Musk doesn’t get a regular salary from the automaker. Instead, he gets paid based on how the company performs, and as a result how Tesla shares (TSLA) perform on the stock market.
In May, Musk earned his first big payday with a tranche of stock options, which at the time were worth around $775 billion. Share prices have more than doubled since then, with the market capitalization of Tesla topping $300 billion recently.
The huge market cap increase means the 6-month trailing average is now more than $150 million, triggering the second tranche for Musk (via Bloomberg).
With today’s share prices just below $1,600 per share, his theoretical payday totals more than $2.1 billion.
The payday is theoretical because Musk isn’t allowed to sell the shares for five years. He has also stated he will not sell his shares, and will instead use the money to help fund his plan to colonize Mars.
The compensation package doesn’t stop there, with a total of 12 possible tranches that Musk could earn. To earn the third, Tesla must have a 6-month average market cap of $200 billion. In addition, Tesla must either post revenue of $35 billion or $3 billion in adjusted earnings before interest, taxes, depreciation and amortization, over four consecutive quarters.
His recent payday and the rapid rise of Tesla share prices has helped Musk climb the list of richest people in the world, now worth more than $70 billion.