Tesla (TSLA): Elon Musk secures more stock to fund SpaceX’s Mars colonization plan


Elon Musk secured the second installment of his Tesla CEO stock compensation plan worth over $ 2 billion in TSLA shares, which he plans to eventually use for his Mars colonization plan .Although Musk does not accept a salary from Tesla, shareholders gave him a very generous and ambitious stock compensation plan in 2018.

The plan is tied to a significant increase in revenue, adjusted EBITDA, and a massive increase in Tesla’s market valuation.

Once these milestones are reached, each $ 50 billion increase in Tesla’s average market cap would result in Musk receiving 1.69 million shares at a fixed price of $ 350 per share.

The CEO would pocket the difference between $ 350 and whatever Tesla’s stock price was when he exercised the stock options.

Here are the main details of the compensation plan:

In May, Tesla confirmed that all of the milestones for the first installment of Musk’s compensation plan had been met and they awarded the $ 1.69 million block – although the CEO has yet to exercise them.He has 5 years to do so.

But with Tesla’s share price rising rapidly, the next milestones have already been crossed just months after the first tranche.

To date, Tesla’s average market valuation is high enough for the second installment of Musk’s compensation plan to vest.

At the current share price, the new tranche is worth almost $ 2.1 billion and since he has not exercised his first tranche, he already has access to $ 4.2 billion in stock options from his plan. current compensation.

Tesla’s board has yet to approve the price for it to become official.

Taking Electrek

This is a crazy amount of money and once Elon decides to exercise those options things are going to get crazy.

First of all, there’s going to be an insane amount of taxes to pay, but more interestingly, perhaps this is what funds Elon’s plan for SpaceX to colonize Mars and make humans a multi-species. planetary.

When Elon’s generous compensation plan was approved in 2018, the CEO said he planned to sell Tesla’s “major” stake in “about 20 years” to fund SpaceX’s Mars plans.

He again commented on something similar earlier this month:

Musk already owns a significant 20% stake in Tesla, but these new stock options will go a long way in helping him fund these plans while retaining a stake in the company.

The CEO could also use Tesla’s dividends to fund other projects if the automaker ever decides to go down that route.

Currently, Tesla does not pay a dividend and does not plan to do so for the foreseeable future as it is reinvesting everything back into growth, but that could be a different story in 10 to 20 years.

What do you think? Let us know in the comment section below.

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