Elon Musk is one of the richest people in the world, with an estimated net worth of $39 billion. What’s even more impressive is that he achieved this despite receiving $0 in salary.
Yes, you read that right. You’re receiving a larger monthly paycheck than the CEO of one of the biggest companies in the world.
He has one edge over the regular employee, though. The billionaire is now entitled to a whopping $770 million performance bonus making him one of the highest-earning business executives around.
If you’re wondering how the 48-year-old business magnate ended up with such a great trade-off, it’s all because of an unorthodox pay package he’s signed with his company.
It involves him getting access to $56 billion worth of Tesla shares over the course of a decade as long he meets a list of goals, including raising the automaker’s valuation to $650 billion by 2028.
Musk’s recent bonus of 1.688 million shares was unlocked after the first of the 12 tranches detailed in the compensation plan. Tesla’s stock is currently valued at around $800, but the CEO was given a discounted price of just $350.
It is not yet confirmed whether Musk has already exercised his stock option, but recent Tesla financial documents show that he has already qualified for it.
A Few Catches
While the bonus is definitely a welcome income for the admittedly cash-poor billionaire, he might not be able to enjoy the fruits of his labor just yet.
The agreement between him and Tesla stipulates that he holds his acquired stocks for a minimum of five years. This means that he can’t cash in on his discounted shares just yet.
In theory, selling his first tranche of shares would give him a profit of $770 million.
That amount may significantly decrease or increase over the coming years, given the stock market’s volatility.
There’s also Musk’s recent fight with California officials regarding his decision to open Tesla’s factory in Fremont despite the state’s efforts to keep non-essential businesses closed down due to COVID-19.
Another thing that might prevent Musk from accessing his performance bonus is the dissent from one Tesla shareholder who thinks that the CEO’s compensation plan violates the company’s fiduciary duty and is too excessive.