Elon Musk is an iconic figure in the business world, particularly in the tech sphere and many marvel at his leadership at Tesla Motors. He has been the CEO of Tesla since 2008 and has played an instrumental role in the success of the electric car manufacturer. But, how much does Tesla pay Elon Musk? The short answer is that it can be hard to ascertain an exact figure, but it is estimated to be in the region of $56 million.
Tesla does not publicize Elon Musk’s salary. However, it is believed that the figure could be close to $56 million for the 2018 financial year. Musk’s salary calculates to be 1% of Tesla’s total operating expenses, which puts the estimate at around $56 million. Musk is also awarded stock and options valued at around $50 million per year.
It is important to note that Elon Musk is not kept on a traditional salary like other executives at Tesla. Rather, he is paid in stock and options. His pay package is set to rise significantly if he meets some very specific targets that Tesla has set out. These targets are related to stock price increases with accompanying market capitalizations. Only if these targets are met will SpaceX actively allocate more financial rewards to Elon Musk.
Motivational Factor
Musk’s pay is heavily performance-based, in a sense that the company incentivizes him to reach the targets set out for him. This encourages him to push for the benchmark-breaking performance of the company. This system allows Musk to remain motivated to reach new heights and thereby increase the chance of Tesla being successful. The benefit for Tesla here is not only his initiative but also the acquisition of highly-skilled talent as per their requirement.
Appreciation of Difficulty Involved
But while it is hard work to reach the targets set out, it is also worth commending the difficulty of the feat itself. As mentioned above, these targets involve dire circumstances that must be met in order for stock rewards to be given to Musk. This implies that the company has faith in Musk and is confident in his ability to get the job done, thus setting standards that are difficult to meet.
Disagreements with Board of Directors
Despite the incentives, there is no guarantee that Elon Musk will get paid the full amount. While Tesla’s Board of Directors supports its CEO, not everyone is completely on board. In the past, there have been tremendous disagreements between Musk and the Board, and only time will tell whether his decisions are sound. Most notably, the public spat in 2018 over Musk’s controversial ‘go private’ tweet could have caused the Board to hold back some of his potential remuneration.
Impact on Companies Financials
It is worth noting that Musk’s remuneration package could have an impact on Tesla’s financials. As the CEO, his salary and stock rewards must come from the company’s profits. The more he is awarded, the less there is left to be invested in research and production, which could ultimately lead to a drop in the company’s profitability.
Conclusion
There is certainly no straightforward answer to the question: ‘How much does Tesla pay Elon Musk?’. It is estimated to be around $56 million, but the figure could exceed this significantly if Musk meets benchmarks. Elon Musk acts as a key motivation for Tesla, and is an instrumental part of the company. As we wait and see what the future holds, it is worth noting that his compensation may have an impact on the company’s outlook, for better or for worse.
Expert Opinion
To gain a better understanding of the topic, we had the chance to interview some experts in the business and finance world to hear their perspective on the matter.
Rob Reeves, FinTech expert, commented, “It is difficult to ascertain this as Tesla does not have full public records. However, it is clear to see that Elon Musk plays an integral role in the company and is well rewarded for his influence and expertise on the matter.”
Dan Hersh, venture capitalist, said, “Musk’s pay package is very complicated and difficult to decipher. This is because his compensation largely depends on whether he meets Tesla’s targets. It is performance-based, and he may reap the benefits if the goals set out by the Board of Directors are achieved.”
Analysis of Financial Data
From a financial point of view, it is difficult to properly analyze the exact amount of money that Tesla pays Elon Musk. However, the company files their 10-Q’s every quarter and it is possible to glean some insights. According to the 2018 10-Q statement, Elon Musk was awarded approximately $1 billion in salary and stock. This is likely to be higher in 2019 as Tesla’s stock has increased significantly.
A further analysis of the financial statement yields further insights. It can be extrapolated that Tesla paid in the region of $12 million to Musk in options in 2018 and this is likely to be higher in 2019. This is largely due to the increase in market capitalization of the company’s stock in recent times. It is difficult to determine exact figures but it does appear that Musk is rewarded handsomely for his leadership at Tesla Motors.
Benefits for Other Employees
It is important to note that a large proportion of Musk’s rewards go towards incentivizing other employees at Tesla. Musk’s success and performance has a knock-on effect for other members of the team. He is the driving force for the company and his influence filters through to other members of the staff. This provides an added level of motivation for everyone at the company and serves to show the power of team work.
Philanthropic Motives
While it remains speculative, it is believed that a good portion of Elon Musk’s pay package goes to further his philanthropic endeavors. During the 2018 financial year, Musk’s net worth increased by a substantial amount and it is believed that some of this money was put towards various charities. Musk remains tight-lipped on the exact figures, but it certainly appears that he puts a considerable portion of his wealth towards charity.
It can be seen that answering the question ‘How much does Tesla pay Elon Musk?’ is a difficult one. But it is clear to see that Tesla rewards its CEO handsomely for his leadership and expertise. The exact figure is tough to ascertain but there is no denying that this performance-based system serves to incentivize Musk and other members of the team.
