Tesla founder and chief Elon Musk will become the richest man in the world by quite a distance if he is able to take Tesla past the $650 billion market value mark within the next decade.
This is because of the new payment plan for the CEO of the company which the shareholders of the company allowed on Wednesday, according to a spokesperson of the company.
Elon Muck would become stinking rich if he manages to make the company attain a number of performance related milestones between 2018 and 208 and increase the market value of the $54 billion company to reach $650 billion till that time – which would be a 12-fold increase. This is the crux of the incentive-based package for Musk.
At present valuation, Musk’s stake in the company is about $12 billion.
Increasing the market value of Tesla 12 times however does not necessarily translate into a similar rate of increase for a single share of the company. Tactics such as issuance of new stock could be undertaken by the company to essentially reduce the current value of stocks so that the stocks remain within a reachable limit for investors.
But the values of the stock that Musk owns in Tesla would touch $120 billion if we assume that the company itself is able to make a 10-fold increase in its market value.
There would also be additional stock awards for Musk on reaching of the individual performance milestones for the company.
An estimate of the possible awarding of additional stocks of the company to Musk is being pinned at around $2,6 billion as per the new compensation plan and making use of established methods of accounting for estimating future cash value of stock options. However, according to a pubic filing, the stock options could be valued at as high as $56 billion if the company manages to increase its market value as is being hoped by it.
According to the filing however, the company has stated that the $56 billion is the possible maximum that Musk would be able to get. Additionally, the company could also issue fresh shares which would reduce the price of the shares that Musk would stand to hold ultimately
At present Jeff Bezos, owner of Amazon is worth a personal net wealth of about $132 billion and is the richest man in the world. for Mush. Hitting the $56 billion is not a must for him too get past Bezos. Musk would amass a total personal wealth of $176 billion in Tesla alone if the $56 billion is achieved. However, he still would stand to gain from his stocks in in his rocket company, SpaceX.
However, there are uncertainties for Musk becoming the richest man in the world.
Amazon chief Bezos would most likely continue to amass wealth in the forthcoming years.
And additionally, if Musk fails to reach the targets he has set for the company, Tesla would not have to pay him anything at all.
(Adapted from Money.CNN.com)