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Elon Musk has become the richest man in the world, surpassing former record holder Jeff Bezos, according to CNBC. Musk is now worth over $ 180 billion.
Musk’s growing wealth reflects the meteoric rise in Tesla’s stock. The company’s stock price closed at $ 816 on Thursday, up nearly 8% for the day. That share price values Tesla at nearly $ 800 billion, several times more than any other automaker.
CNBC says Musk’s rise to become the richest man in the world is the fastest in history. At the start of 2020, just over a year ago, Musk was only worth $ 27 billion. At the time, Tesla’s shares were trading below $ 100 (adjustment for a stock split in 2020).
The stock rose to over $ 700 during 2020. Then, during the first week of 2021, it rose above $ 800.
Big paydays ahead
Musk will become even richer in the years to come if he manages to increase Tesla’s income and profits. A risky but generous compensation package approved by shareholders in 2018 provides Musk with up to 12 stock option grants if Tesla reaches certain milestones for the company’s valuation, revenue and profit. So far, Musk has qualified for four of 12 payouts.
To earn the first payout, Tesla’s stock had to be $ 100 billion, and Tesla had to reach a certain threshold of income or profit. Musk became eligible for a second payout when Tesla reached a value of $ 150 billion, still with a revenue or profit target. This process continues until the 12th installment, for which Musk qualifies when Tesla’s market value reaches $ 650 billion and Tesla achieves higher revenue and profit targets.
The rules on income and profit are a bit complicated, but for example, Musk will get all 12 awards if Tesla makes $ 175 billion in revenue and $ 6 billion in profit over a one-year period. Between the fourth quarter of 2019 and the third quarter of 2020, Tesla achieved sales of $ 28 billion and profits of $ 550 million. Tesla will therefore have to grow considerably before Musk gets all of these payouts.
If he qualifies for these payments, they will significantly increase Musk’s wealth. Each option grant gives Musk the right to buy 1% of Tesla’s shares at a greatly reduced price. So if Musk wins the remaining eight awards, they’ll add tens of billions of dollars to his net worth.
There’s little mystery about how Musk wants to use his formidable wealth: he’s determined to send humans to Mars. His other company, SpaceX, is working hard to develop Starship, a rocket designed to enable interplanetary travel. Starship is designed to dramatically reduce the cost of moving people and cargo through space and between planets – perhaps enough that someone with a net worth over $ 200 billion can personally fund a program. important on Mars.
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