Tesla (TSLA -2.76%) CEO Elon Musk has collected his first payment in a massive $56 billion incentive package put in place in 2018. This first tranche is worth almost $775 million based on Thursday's closing price for Tesla shares, the options strike price of the agreement, and the 1.7 million shares granted to Musk, according to an SEC filing. 

The company explains the performance package, saying the "CEO Performance Award is comprised of a 10-year maximum term stock option to purchase 20,264,042 shares of Tesla's common stock, divided equally among 12 separate tranches that are each equivalent to 1% of the issued and outstanding shares of Tesla's common stock at the time of grant, at an exercise price of $350.02 per share."

dollar sign landing on man's open hand, representing executive bonus pay

Image source: Getty Images.

This first tranche was triggered when Tesla met its first market capitalization milestone of $100 billion, along with certain operational revenue or profitability requirements. The market capitalizations requirements are met based on both a six month, and 30 day, trailing average of the Tesla stock price.

Upon exercising the options, Musk must also hold the stock for a minimum of five years, "with limited exceptions", and must remain as either "Chief Executive Officer or, alternatively, as our Chief Product Officer and Executive Chairman (with any other Chief Executive Officer reporting directly to him)" at the time the milestone is met.

One shareholder is challenging the incentive plan in a lawsuit, however. In Richard J. Tornetta v. Elon Musk, Tornetta alleges that Tesla's board violated its fiduciary duties by approving an excessive compensation plan for Musk, according to the Tesla's proxy statement.