Elon Musk has lots of reasons to dance.

Tesla Inc. shares have been on a tear since October, when the electric-vehicle maker posted a surprise third-quarter profit and said its Model Y will launch months ahead of
schedule.

The stock surged to a record US$469.06 (NZ$704) on Tuesday, lifting Tesla's market value to US$84.5 billion ($127b), almost as much as Ford Motor Co. and General Motors Co. combined.

A bit more good news could push it to US$100b -- the threshold that will unlock the first tranche of Musk's all-or-nothing moonshot award. On paper, it will net him about $346 million.

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A Tesla representative didn't respond to a request for comment.

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Musk, whose $29.3b fortune is mostly tied up in Tesla stock, has had a spring in his step lately. He danced on stage Tuesday at Tesla's factory outside Shanghai to celebrate
delivering the first Model 3 sedans to public customers in China.

He spent New Year's Eve at the company's car-assembly plant in Fremont, California, closing out a quarter in which Tesla delivered a record 112,000 cars.

It's a sharp reversal from mid-2019, when the shares languished as Wall Street grew increasingly skeptical about consumer demand and Musk called for a "hardcore" review of
expenses after cutting thousands of jobs.

Tesla vehicles are seen on an assembly line at Tesla's gigafactory in Shanghai. Photo/AP
Tesla vehicles are seen on an assembly line at Tesla's gigafactory in Shanghai. Photo/AP

Musk's pay package is believed to be the largest executive compensation deal in history.

It's structured the same way as his two previous pay plans, consisting of a trove of stock
options that vest in increments if ambitious goals are met.

But the size and scope of the most recent award is unprecedented. It outlines plans for Tesla to grow its market value to $650b and increase revenue and adjusted earnings
by multiples.

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At stake for Musk is 20.2m options that could net him more than $50b if all targets are met, according to Tesla's estimates. He gets no salary or bonuses.

The pay plan drew sharp criticism from shareholder-advisory firms but was approved by an overwhelming majority of Tesla investors in March 2018.

Milestones Achieved

Within a year, the company achieved two of the milestones for Musk's award: it brought in more than $20b in aggregate revenue over four quarters and booked more than $1.5b in adjusted earnings before interest, taxes, depreciation and amortisation over that span. It also said the next Ebitda threshold --$3b -- is within reach.

For Tesla to achieve a $100b market value, its stock must climb to $554.80, based on the current number of shares outstanding. But it's not a one-day event: the terms of Musk's award require that both the six-month trailing share price average, as well as the 30-day trailing average, exceed that figure before the first tranche of options is released.

The tranche consists of 1.69m options that would net Musk around $346m if he exercised them and sold the shares immediately at the threshold share price, which could be a welcome payday for a billionaire who told a jury last month that he's short on cash.

However, that's an unlikely scenario. He hasn't sold a single share of Tesla for years, apart from unloading $593m of stock in 2016 to pay income taxes.

- Bloomberg