1), congrats on your 2018 pay of *40,668* x the average $TSLA employee. Agreed that 40k:1 vs. the median was simply not enough.
— luis carruthers (@orthereaboot) March 28, 2019
Elon Musk’s nearly $2.3 billion in compensation last year is 40,668.14 times more than the average Tesla employee earns, according to a company filing.
All but $50,000 is in stock that hasn’t vested yet and requires payment of an option fee. As a result, Musk might not realize the full value of the compensation.
The reward is part of a pay deal approved by the Tesla Board of Directors in January 2018 under which Musk will stay as CEO for 10 years. Ars Technica reports:
The pay package is tied to the value of the company’s stock as well as revenue and earnings targets. If Tesla’s stock never rises above $100 billion, Musk will get nothing for a decade’s work as Tesla’s CEO (aside from increases in the value of the stock he already has). If the stock reaches a value of $100 billion—and the company either achieves revenues of $20 billion or earnings of $1.5 billion—Musk will get 1 percent of the company’s stock, an award worth $1 billion.
Things get a lot more generous from there. If the stock rises to $150 billion (and Musk reaches another revenue or profit target), Musk gets another 1 percent of the stock, which will be worth $1.5 billion. That pattern continues in $50 billion increments until Tesla’s stock rises above $650 billion—at which point Musk will get a stock award worth $6.5 billion. Musk’s stock awards will total $45 billion if he hits all 12 milestones.
Musk already owns more than 20 percent of Tesla stock. So if Tesla’s stock price did rise to $650 billion and Musk got another 12 percent, his net worth would be well in excess of $200 billion—likely making him the wealthiest person in the solar system.
Musk has said he is acquiring personal wealth in order to fund his dream of colonizing Mars. Two hundred billion would go a long way toward that goal.
Despite the eye popping compensation, Musk tapped his five California mansions for $61 million in home equity loans in December.
According to Bloomberg, Musk is rich on paper but relatively cash poor. Taking on debt (in Musk’s case, $180,000 monthly payments on the Morgan Stanley loans), and current low interest rates allow ultra-rich people some liquidity flexibility.
Since it was founded nearly 16 years ago in July 2013, Tesla has produced three profitable quarters and had $11.97 billion in long-term debt as of the end of 2018. The company expects to report a loss during the first quarter of 2019.
Tesla has been offering deep discounts on its vehicles as it attempts to reduce its inventory before the quarter ends on Sunday. Musk also issued a call to employees to volunteer to help deliver 30,000 cars in their spare time.