In 2012, the multi-billionaire Musk was granted a performance award that gave him the option of purchasing 5,274,901 shares of Tesla’s common stock, 5% of Tesla’s total issued and outstanding shares at the time.

Tesla CEO Elon Musk has earned the first part of an estimated US$2.6 billion payout tied to stock options, Tesla said in a filing to the US Securities and Exchange Commission.

Elon Musk, who hopes to see his SpaceX Dragon rocket take two NASA astronauts to the International Space Station on Saturday after it was aborted 17 minutes before take-off on Wednesday, has not received a salary from Tesla since May last year.

In 2012, the multi-billionaire Musk was granted a performance award that gave him the option of purchasing 5,274,901 shares of Tesla’s common stock, 5% of Tesla’s total issued and outstanding shares at the time.

Tesla told the US Securities and Exchange Commission that all of the market capitalisation targets and all but one of the targets in Musk’s performance award have now been met.

Elon Musk

Elon Musk, who has just had a son with girlfriend Claire Boucher (musician Grimes), stood to receive options to purchase shares if Tesla shares reached certain benchmarks, an important one being a market capitalisation averaging US$100 billion for six months. With benchmarks satisfied, it gives Musk “payment of the exercise price of US$350.02 per share and the minimum five-year holding period generally applicable to any shares he acquires upon exercise,” the company said. Tesla ended Thursday at US$805.81, which means Musk has a paper profit of about US$755 million.

Baby

Tesla’s market capitalisation stood around US$150 billion on Thursday, which compares with a market value around US$38 billion for competitors General Motors and about US$23 billion for Ford Motor.

Elon Musk could earn an estimated US$2.6 billion by the time the decade-long payout plan is completed. Tesla has to reach a market value of US$650 billion for it to be paid.

Musk’s multimillion-dollar award dwarfs the payday of Google’s parent, Alphabet, who said in late April that CEO Sundar Pichai’s total compensation for 2019 topped US$280 million, thanks to stock awards tied to his promotion of CEO of Alphabet, MarketWatch reported.

Shanghai

Musk has not disclosed if he has exercised his option. The filing also set Tesla’s general meeting for 7 July in a museum in Mountain View, California, where Tesla is asking shareholders to approve Musk’s compensation, among other issues.

Earlier this month, Musk wiped nearly US$15 billion off Tesla’s valuation when he tweeted that shares were “too high”. That led to a double-digit fall for the stock, erasing a bump from a surprise quarterly profit reported in late April.

Tesla shares have soared 93% so far this year, contrasting with losses of around 6% and 11%, respectively, for the S&P 500 index and the Dow Jones Industrial Average.