Tesla overtakes Volkswagen in capitalization and Elon Musk hits bingo

There are sometimes symbolic thresholds… And that of the 100 billion dollars is one of them. In 2019, the fortune of Bernard Arnault, boss of LVMH, crossed this symbolic bar and he even became, for a few hours in December and then in January, the richest man on the planet in front of Jeff Bezos, according to the real-time ranking of Forbes. Not long enough for the French to notice.

Wednesday, January 22, it was the turn of another company to take this symbolic step. The capitalization of Tesla, Elon Musk’s electric automobile firm, has crossed this threshold and surpassed the German Volkswagen. This makes the American company the second largest manufacturer in the world, behind the Japanese Toyota.

There are symbols that arouse legitimate pride, but they are also sometimes embellished with stinging and stumbling financial rewards. Everyone suddenly remembered that Elon Musk, the 20% owner-shareholder of Tesla – whose personal fortune is estimated at 32 billion dollars (28.8 billion euros) according to Forbes –, had a very specific remuneration, made up of stock options. And at 100 billion (90 billion euros) of capitalization, he should receive 1% of the capital of his company, provided that the action remains at this level for six months. The Wall street journal took his calculator: Mr. Musk should then reap an unrealized capital gain of about 350 million dollars (315 million euros).

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It is true that Tesla is enjoying an amazing stock market success, its price having tripled since the trough of June 2019. This lowest level was reached after a dreadful sequence started in 2018, when Telsa failed to increase enough sales and profits. But also, when Elon Musk was scrapping with the SEC, the policeman of the American Stock Exchange for having said anything on Twitter (he had considered an exit from the quotation), when he dispersed in his activities, like Space X, and when he was smoking marijuana in the middle of a radio interview.

Donald Trump is delighted with the company's success

Its board of directors had, at the beginning of 2018, taken the lead and had Tesla shareholders adopt an incentive compensation package to push Mr. Musk, whose inventive genius is undisputed, to fully invest in Tesla. Zero salary, zero bonus, but only actions depending on the performance of the group. This package took the form of twelve tranches of stock options, which represent 1% of the capital each time, exercisable when the market capitalization exceeds a certain threshold (there is also a criterion of turnover or profit) .


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