Elon Musk poised to bag $750M as Tesla workers face furloughs

Elon Musk is speeding toward a $750 million payday — even as Tesla employees are getting slammed by pay cuts and hundreds of hourly workers are furloughed.

After getting hit by factory closures that the coronavirus epidemic mandated, Tesla shares have lately been making a comeback, with investors hoping for news that its plant in Fremont, Calif., will soon reopen when the company reports its quarterly earnings on Wednesday.

With the electric-car maker’s market capitalization currently hovering around $145 billion, Musk is on the verge of triggering the first milestone in his eye-watering $50 billion pay package, which could see him pocket a cool $750 million in one fell swoop.

That’s because, for Musk to claim the first payout, the automaker’s stock market value needs to hit a six-month average of $100 billion. The six-month average currently sits at $96 billion, so barring an earnings disaster on Wednesday, it looks poised to cross the mark in the coming days or weeks.

Once Tesla shares pass that milestone, Musk will get the option to buy 1.69 million Tesla shares at $350 a pop. Taking Tesla’s Monday closing price of nearly $800 as an example, Musk could flip his new shares for a profit of $758 million.

Tesla shares cratered more than 60 percent in February as the coronavirus shut down production and hurt demand for its cars in the US and China, but have recovered in the lead-up to earnings.

This week, Tesla backed down from a Friday order to its Fremont factory employees, telling them to return to work after California extended its shelter-in-place order.

The decision to scrap its plans came from “the direction of the executive leadership team,” according to CNBC, and sent Tesla shares down more than 3 percent Tuesday afternoon after the stock received a Monday bump at the prospect of restarted vehicle production.

Silicon Valley-based Tesla stopped making cars at its Fremont plant on March 23 after a standoff with local authorities over whether it was considered an essential business that could operate normally under the lockdown. Alameda County health officer Erica Pan deemed the plant a “public health risk,” according to Bloomberg News.

Investors will focus on Tesla’s cash burn related to its interrupted manufacturing and sales, and on Musk’s expectations for consumer demand in a potential long-term global recession, Baird analyst Ben Kallo wrote in a client note last week. The closure of the Fremont plant came just as Tesla was increasing production of its new Model Y sport utility vehicle.

Analysts on average expect the March quarter jump of 30 percent, to $5.9 billion — down from $6.7 billion at the start of February. Analysts expect a loss of 36 cents per share.

To earn his full, $50 billion award, Musk would have to lead Tesla to a market cap of $650 billion by 2028. Tesla’s board signed off on the compensation package in March 2018, when Tesla’s market cap was $52.46 billion.

If he doesn’t reach any milestones, according to the company’s filing, he will not get paid. The South Africa-born billionaire then has eight years left to clear 11 more valuation hurdles, mostly in $50 billion increments, which would fetch him roughly $5 billion each.

Musk does not take a salary from Tesla, and only earns money through performance-based rewards.

A full payoff for Musk, who is also the majority owner and CEO of the SpaceX rocket maker, would surpass anything previously granted to US executives.

With Post wires

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