According to a company filing, Tesla CEO Elon Musk received no compensation in 2020, but he did receive stock options worth $22 billion during the year.
Musk did not receive any base pay during the year, according to the filing. This is consistent with Tesla’s previous practice, though in previous filings, the company reported what Musk would have earned if he had been paid the state’s minimum wage. This amounted to $23,760 in 2019.
“However, he has never accepted his salary,” said the company in it’s filing late Friday. “Commencing in May 2019 at Mr. Musk’s request, we eliminated altogether the earning and accrual of this base salary.”
Tesla (TSLA) did disclose the value of Musk’s massive stock option package back in 2018, when the deal granting him the stock options was first approved by shareholders. That valuation, which was based on widely accepted methods, turned out to be extremely conservative, with the options valued at only $2.3 billion.
Musk is eligible for options to buy up to 101 million split-adjusted shares of stock at a $70.01 exercise price under the compensation arrangement. These are being distributed in 12 equal tranches of 8.4 million options, with each tranche based on the company meeting certain financial milestones and stock valuation targets.
Tesla shares soared 743 percent in 2020, making it the best-performing US stock and far and away the most valuable automaker on the planet.
The financial milestones have been more difficult to reach, but four of Musk’s stock tranches vested in 2020, giving him the right to buy 33.8 million shares at a $2.4 billion exercise price. Those stocks were worth $21.9 billion as of Friday’s close.
So far in 2021, the company has achieved two more financial milestones, earning Musk another 16.9 million stock options. At today’s prices, those options would be worth $10.9 billion.
In an earlier filing detailing its record second quarter profit, the company stated that it is now “probable” that it will hit three more milestones in the near future, implying that Musk’s options windfall for 2021 could match or even exceed the awards for 2020.
Musk, like the majority of top executives with stock options, has yet to exercise any of them. Options are typically exercised only when they are about to expire, such as when an executive is leaving the company and risks losing them.
Although executives occasionally sell shares to diversify their holdings or pay taxes, Musk has rarely done so during his time at the company.
He owned 170.5 million shares outright as of June 30 and had options to buy another 73.5 million shares, giving him a 23 percent stake in the company.
Musk is one of the wealthiest people on the planet, thanks to his Tesla stock and a majority stake in his other company, SpaceX, which he also runs.
Musk’s net worth, according to Forbes’ real-time billionaire tracker, is $186.7 billion, just behind Amazon (AMZN) founder Jeff Bezos’ $190.7 billion. With a net worth of $201.6 billion, Forbes ranks Bernard Arnault, the CEO of French luxury goods giant LVMH, and his family as the richest people on the planet.
Musk’s Tesla stake is worth $171.3 billion after factoring in the exercise price of both stock and options.
But, because he doesn’t take cash salaries, he’s had to take out a lot of loans. Musk’s Tesla shares have been pledged as collateral “to secure certain personal indebtedness,” according to the Tesla filing.
Those 88 million shares are now worth $63 billion, despite the fact that the total amount of Musk’s borrowing is unknown. Since the previous company disclosure in April, the number of shares pledged as collateral has decreased by 4 million shares.