Elon Musk is in line to receive stock awards worth more than $23 billion after Tesla posted record quarterly profits.
The world’s richest man is to receive three new tranches of shares under his lucrative compensation arrangement with the electric carmaker. He takes no salary from his role as chief executive.
Tesla eclipsed expectations on Wall Street last night with an 81 per cent rise in revenue and its highest ever profits in the first quarter. The group is already the world’s most highly valued carmaker after riding the surge in demand for electric vehicles in recent years and increasing production.
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Each of the three performance-related stock awards, subject to certification by Tesla’s board of directors, is worth about $7.7 billion.
Tesla, which has a market value of more than $1 trillion, was established in 2003 and has been led by Musk since 2008. The group is based in Austin, Texas, having relocated its headquarters from Silicon Valley last year.
Musk, 50, runs Tesla and the rockets and space exploration business SpaceX. He has an estimated personal fortune of $263 billion, according to Forbes, much of it tied up in his stakes in either company.
In its first-quarter earnings, Tesla reported revenue of $18.76 billion and adjusted earnings of $5.02 billion. When combined with its performance over the previous three quarters, this cleared hurdles that line up three of the twelve tranches listed in his 2018 pay deal. Eight targets had already been hit. One tranche remains.
Each tranche allows Musk to buy 8.4 million shares in Tesla at $70.01 apiece. The carmaker’s stock closed at $977.20 last night, indicating that three such tranches would collectively lead to a total profit of more than $23 billion. Its shares continued to rise during out-of-hours trading.
Asked during a call with analysts and investors about the prospect of a renewed compensation arrangement with Tesla, Musk said that no discussions were taking place.
There has been intense scrutiny of Musk’s financial arrangements after his $43 billion bid for Twitter. Shares in Tesla stumbled after he unveiled the bid last week as analysts raised the prospect of him reducing his stake in the carmaker to help to finance the deal.