Elon Musk takes shot at ‘sanctimonious’ Valley as Tesla CEO set to earn $750m from stock payout

Negotiated two years ago, payout comes as criticism grows of billionaires becoming richer at time of global strife

Tesla CEO Elon Musk is on the cusp of a massive payday as the electric carmaker’s stock recovers from its coronavirus slump.

On Monday, shares surged 10 per cent ahead of the company’s quarterly report and the belief that it may soon be able to reopen its facility in Fremont, California.

Mr Musk, who receives no salary or cash bonus, has share options that are now likely to vest based on the company’s market capitalisation and milestones for revenue and profit growth. The potential payout of $750m would surpass any payout previously granted to a US executive.

Perhaps feeling in a punchy mood, Mr Musk took a shot at the centre of the tech industry. The CEO and majority owner of the SpaceX rocket maker tweeted on Monday night: “Silicon Valley has become Sanctimonious Valley … Too much the moral arbiter of the world.”

When a follower asked: “Overtaking Hollywood?” Mr Musk responded: “Which isn’t easy!”

Negotiated two years ago, the first in a series of payouts comes at an extremely awkward time as criticism grows of billionaires becoming increasingly richer at a time of global strife. The coronavirus pandemic forced Tesla to shut down production, which led to a decision to furlough all non-essential workers and implement salary cuts.

However, the company’s Shanghai ‘gigafactory’ facility is ramping up production, and employees in California have been told that the company wants to restart production there by 4 May.

From a low point on 18 March, Monday’s rally put Tesla’s market capitalisation at $145bn. Importantly for Mr Musk, its stock market value reached a six-month average of $96bn. Hitting a six-month average of $100bn would trigger the vesting of the first of 12 tranches of options granted to the billionaire to buy Tesla stock as part of his two-year-old pay package.

Each tranche gives Musk the option to buy 1.69 million Tesla shares at $350.02 each. Taking Monday’s Tesla closing stock price of $798.75 as an example, Mr Musk could sell those shares for a profit of $758m.

If Mr Musk meets further ever higher targets he stands to receive 11 further payouts of 1.69 million shares. If targets are missed in a particular period he receives nothing.

His current net worth is 24.6bn making him the 31st richest person in the world, according to Forbes.

With reporting from Reuters