Tesla billionaire Elon Musk set for $720m pay day

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Elon Musk is set to get rewarded for Tesla reaching a key milestone. (Win McNamee/Getty Images)

Tesla’s (TSLA) billionaire chief Elon Musk is about to get even richer.

Musk, who is worth $39.4bn (£31.9bn) according to Forbes, is set for a $720m pay out from his electric car company after hitting a key performance milestone.

Musk draws no salary at Tesla but is granted stock options under a performance plan approved by shareholders in 2018. Musk reached another milestone in that plan on Wednesday (6 May).

Tesla’s closing price on Wednesday means the electric car maker has now been valued at an average of $100bn for the last six months, a key target in Musk’s performance plan. Tesla was valued at $145bn at market close on Wednesday.

That milestone unlocks share grants for Musk worth about $720m based on Tesla’s closing price. Musk, who owns around 20% of Tesla already, can’t sell the shares for five years.

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Tesla’s stock has rallied over 80% since the turn of the year and the company is now the world’s second most valuable automaker, behind only Toyota. Musk tweeted on Friday that Tesla’s share price was “too high”, briefly wiping 10% of the stock’s value.

In the same stream of tweets Musk vowed to sell most of his “physical possessions” claiming it would give him “freedom.” The billionaire has since put two of his multi-million dollar Californian homes on the market.

Musk is in-line for more payouts from the share award scheme approved in 2018 if Tesla stock continues to rise. The scheme, which runs till 2028, will award Musk more stock options for every $50bn increase in Tesla’s market cap, up to a maximum of $650bn. If Tesla reaches that lofty target and Musk received a full pay out under the scheme, he will have earned the largest executive payout in US corporate history.

Earlier this week Musk welcomed his first child with partner Grimes, the Canadian singer. The couple have named the baby X Æ A-12.