Background Information
Elon Musk is a South African-born American entrepreneur, engineer and inventor. He is the founder, CEO and chief engineer/designer of SpaceX, co-founder, CEO, and product architect of Tesla Inc., and co-founder of Neuralink. He is also Chairman of SolarCity, a sustainable energy company.
Though estimates of his exact net worth vary, Musk is easily one of the wealthiest people in the world today and is in the company of people like Jeff Bezos and Bill Gates. But how much does Elon Musk actually make?
What is Elon Musk’s Salary?
Musk’s salary is not known, but it is estimated to be around $35,000-40,000 per year. That’s a significant drop from his earlier salary of $500,000. It is likely the drastic cut was part of an agreement Musk made to avoid potential conflicts of interest with the company following Tesla’s 2017 compensation plan.
The 2017 plan states: “Elon will receive no guaranteed compensation of any kind. Thus his compensation will be completely aligned with that of other shareholders, which we believe is the right way for Tesla to operate.” This can make it difficult to estimate exactly how much Musk makes each year.
Stock Options
Musk’s salary is supplemented by stock options and incentive pay. For instance, in 2018, Musk was granted an additional 20.3 million stock options that would vest over 10 years. This was the first grant of options he had received in eight years. These stock options are an incentive-based system designed to reward top executives with more money if they achieve certain goals and objectives set by the company. The stock options vest over time, and when they do, Musk can cash them in to earn money.
In addition, Musk has stock options as part of his compensation package. These options vest over time (usually four years), and when they do, Musk can cash them in for money or keep them for future gains.
Other Ventures
Musk’s salary may be small, but his wealth is supplemented by his other ventures. For instance, he holds indirect stakes in SpaceX, Tesla Inc., SolarCity, and other companies through his venture capital firm, Musk Foundation. This can add millions of dollars to his pocket.
He has also received generous payouts for working on various projects for the US government. For instance, he recently received a $2.6 billion payment from NASA for his work on the celebrated SpaceX Falcon 9 rocket program. This venture alone has helped to vault Musk into his current position as a billionaire.
Income Sources
Musk’s salary alone is small in comparison to some of the other billionaires in the world today, but his wealth has grown over the years thanks to his varied income sources. He has earned money through his ventures, stock options, and incentive-based programs with the companies he works with.
He has also benefited from strategic investments in different companies, and from large payouts for his work with the US government. As a result, Musk’s total earnings now add up to billions of dollars, making him one of the world’s wealthiest people.
Tesla Options
Musk also holds a large number of options in Tesla stock. These options allow him to buy Tesla’s shares for slightly less than current market prices. This means that Musk is essentially investing in the company before it goes public and at a price that will be more favorable to him. If the stock goes up in value, Musk will reap the profits.
Additionally, Tesla has a special incentive program that prizes its top executives and rewards them with large payouts. This program awarded Musk a $2.6 billion payout in 2018, which was split into 12 tranches and spread out over 10 years. This is a substantial sum of money and speaks to the confidence that Musk has in Tesla and its future.
Conclusion
Elon Musk’s salary is estimated to be in the region of $35,000-40,000 per annum, significantly lower than his earlier salary of $500,000, likely due to conflicts of interest between the company and Tesla’s 2017 compensation plan. However, Musk earns a significant amount of money from his other ventures and from stock options and incentive pay. He has also benefited from strategic investments and large payouts for work with the US government. This means his total earnings add up to billions of dollars and make him one of the world’s wealthiest people.
