• Tuesday's surge in Tesla's stock price pushed Tesla's market cap to $159.9 billion
  • This met the second of two condition for Musk to attain his historic payday
  • Tesla's stock rally made CEO Elon Musk $16 billion richer

The skyrocketing stock price of Tesla Inc. has made its billonaire CEO Elon Musk $16 billion richer by boosting the value of his 19 percent stock ownership to more than $30 billion. All of this since January 1.

At the close of trading Tuesday, Tesla's stock at the NASDAQ Composite steadied at 13.7 pecent to $887.06 after surging by as much as 24 percent. It closed Monday at $780 and opened Tuesday at $882.96. Tesla ended Tuesday with a market cap of $159.9 billion.

Tesla's soaring stock has jumped 36 percent in only two days. It's risen 400 percent since June 2019.

Analysts said Tuesday’s steep share price climb means Musk will take home a lot more cash under his record-breaking compensation package. This unique package is built on stock options that rely on market value targets.

An agreement with Tesla means Musk does not take a salary. Instead, he benefits from a risky options package that envisions the stock market value of Tesla rising to $650 billion over 10 years. Two milestones have now been achieved that could see Musk on his way to taking home some $1.8 billion. The first saw him attain operational targets on revenue and adjusted earnings in 2019.

Tesla’s market cap hit $100 billion in January, paving the way for Musk’s first tranche of options to vest. Tesla's market cap hit $159.9 billion on Tuesday, opening the way for the second tranche to vest. The only thing left for Musk to achieve now will be for Tesla’s market cap to stay at or above each target level for one- and six-month averages for each set of options to vest. Analysts say this will likely occur within the year.

In March 2018, Tesla shareholders approved a pay package that stood to deliver more than $50 billion to Musk but tied his pay to ambitious goals for the company’s growth.

Under the plan, Tesla’s market value needs to skyrocket to $650 billion over 10 years for all the options to vest. Musk must also stay at Tesla, either as CEO or executive chairman and chief product officer to receive the package. This compensation scheme was initially valued at $2.6 billion but could yield him more than $50 billion when fully vested.

“The Board believes that the Award will continue to incentivize and motivate Elon to lead Tesla over the long-term, particularly in light of his other business interests,” said Tesla in a securities filing in March 2018.

The package doesn’t vest immediately, however. Tesla’s value needs to remain above $100 billion for some time. Tesla also has to achieve $20 billion in annual sales or $1.5 billion in earnings before interest, taxes, depreciation and amortization, after adjusting for stock compensation before Musk is entitled to this massive payout. Tesla reached both of these two earnings metrics in 2018.

Musk will receive the first tranche only if Tesla sustains the market value on average for a trailing six-month period, as well as on average for 30 calendar days. There are 11 other tranches of potential payments.