Elon Musk gets a $770 million award as Tesla hits goals

Remember Elon Musk's wild, all-or-nothing Tesla compensation plan? Well, it's certainly not going to be nothing.

In a SEC filing ahead of a shareholder meeting, Tesla said that it has hit the financial goals needed to unlock the first out of 12 possible tranches of Musk's compensation award. Musk can now purchase 1.69 million Tesla shares for $350.02 per share, and given that Tesla stock closed at around $805 per share on Thursday, the difference is currently worth $770 million.

"As of the date of this proxy statement, one of the 12 tranches under this award has vested and become exercisable, subject to Mr. Musk’s payment of the exercise price of $350.02 per share and the minimum five-year holding period generally applicable to any shares he acquires upon exercise," the document reads.

The five-year holding period means Musk cannot sell his shares for another five years, but if Tesla keeps doing well, they might be worth even more in the end.

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It wasn't easy getting this money, though.

In January 2018, Tesla said its CEO will have a $0 salary — in fact, he would not receive guaranteed compensation of any kind. Instead, he'd get an increasingly more valuable vesting options if Tesla hit certain goals. The first one of these was for Tesla's market cap to be over $100 billion, on average, over a period six months. Tesla also had to have either $20 billion in annual revenue, or $1.5 billion in adjusted earnings.

Those two goals have now been hit, but in early 2018, when Tesla was struggling with ramping-up Model 3 production and company stock was hovering at around $330, they looked nearly impossible. It's even more impressive given that the coronavirus pandemic stalled Tesla production and decimated the company's stock price in February and March. After hitting a low of about $361 in March, the Tesla stock price more than doubled over the next two months.

Ultimately, if all 12 milestones are reached, Tesla would be worth $650 billion (current market cap is $149 billion), and Elon Musk would be, well, a lot wealthier than he is now (he's currently worth $36.3 billion according to Forbes).