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Tesla CEO Elon Musk unveils the Cybertruck at the TeslaDesign Studio in Hawthorne, Calif. The cracked window glass occurred during a demonstration on the strength of the glass.
Robert Hanashiro | USA TODAY | Reuters
Tesla reached a $100 billion market cap for the first time at the beginning of trading Wednesday, setting CEO Elon Musk up for a large payout.
Tesla’s stock was up more than 3% at the start of trading, bringing its market cap to about $102 billion. It’s market cap topped out at $103.12 billion at the bell.
The gains could send CEO Elon Musk home with a tidy payout. In 2018, Tesla’s board and shareholders authorized a compensation plan for Musk, allowing him to earn options worth potentially more than $55 billion over the next decade. Musk would earn the first tranche of at least $346 million in shares if Tesla’s market capitalization hits and stays at $100 billion.
Musk currently draws no salary, although he owns around 20% of the company.
To earn the payout, the company must keep its market cap above $100 billion long enough to achieve a $100 billion market cap on both a 30-day and six-month trailing average, according to a regulatory filing. The company must also hit annual revenue or EBITDA milestones at the same time in order for Musk to get that first tranche. The company would need to report either trailing-four-quarter revenue of $20 billion or EBITDA (minus stock-based compensation) of $1.5 billion.
That’s all assuming the compensation plan holds up in court.
Tesla stockholder Richard Tornetta sued Musk and members of Tesla’s board of directors in a Delaware Chancery Court, alleging that the award is excessive, and the board’s vote to give it to him amounts to a breach of fiduciary duty.
At a market cap greater than $103 billion, Tesla’s market cap stands above that of General Motors and Ford combined.