After the release of Tesla’s first-quarter earnings, Elon Musk has unlocked three tranches of his 2018 incentive program that is worth $23 billion.
Last Wednesday, Tesla reported its first-quarter revenue for the year which scored Elon Musk $23 billion in new compensation. The company’s first-quarter earnings have generated a cumulative $62 billion in revenue and nearly $15 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which surpassed Wallstreet estimates and left some “speechless”.
Musk has hit three tranches out of 12 milestones on his 2018 incentive program—annual revenue of $55 billion, annual adjusted EBITDA of $12 billion and $14 billion over four consecutive quarters.
For each tranche that Musk unlocks, it will allow him to buy 8.4 million Tesla shares at $70.01 each. With the stock’s current price, the three tranches could generate a profit of $23 billion, or about $7.7 billion per tranche—based on Tesla’s closing price on Wednesday at $977. However, he cannot sell the resulting shares for five years.
It is noted that Musk is not receiving any salary or cash bonuses. Tesla stated before in the Performance Award Program that “Elon will receive no guaranteed compensation of any kind – no salary, no cash bonuses, and no equity that vests simply by the passage of time. Instead, Elon’s only compensation will be a 100% at-risk performance award, which ensures that he will be compensated only if Tesla and all of its shareholders do extraordinarily well.”
Musk’s compensation still has to be certified by Tesla’s Board of Directors.