Elon Musk has achieved remarkable and unexpected things with Tesla TSLA in the 16 years since his electric-car maker debuted its first prototype. Add to that list the likelihood the billionaire entrepreneur is closing in on the last requirements to win a stock jackpot worth $600 million or more–in the middle of what’s shaping up to be the worst economic slump since the Great Depression.
Six weeks ago, with U.S. stock indices and Tesla shares plunging as the scope of the severity of the COVID-19 pandemic unfolded, the odds Musk would achieve the first tranche of his 12-part $55 billion compensation package looked slim. Yet Forbes now estimates the stock’s 100% rebound from a recent low-point on March 18 has Tesla on track to hit both six-month and 30-day market cap averages of $100 billion in early May. Once that happens, the company’s board would award Musk 1.69 million Tesla shares that, factoring in an exercise price of $350.02 share, would have a net value of at least $600 million. Tesla’s rebound far outpaced the 18% increase in the S&P 500 and GM’s 30% rise since March 18.
Musk’s compensation package runs through 2028 and was unveiled more than two years ago, well before the current health crisis. A review of it by The New York Times NYT in January 2018 called it the “boldest pay plan in corporate history.” Never one to think small, Musk told the paper: “I actually see the potential for Tesla to become a trillion-dollar company within a 10-year period.”
Certainly, the timing of the award is awkward. Tesla’s South African-born CEO and cofounder, with a net worth Forbes estimates at $40 billion as of April 27, would be getting the biggest payday of his life at a time of widespread economic turmoil and job loss across the U.S. and major developed economies. More than 26 million Americans have filed unemployment claims in the past six weeks of the coronavirus shutdown, which in turn appears likely to trigger a recession and a continued, unprecedented level of Federal spending. Tesla itself implemented across-the-board pay cuts for all employees and furloughed thousands of U.S. factory workers.