According to a recent filing, Tesla CEO Elon Musk was entitled to a $37,584 salary last year. As usual, he didn’t take it. (The Wall Street Journal reports that Musk never takes his salary.) However, lest you worry that everyone’s favorite real-life Bond villain/superhero is going to have trouble making ends meet, rest assured that he’ll probably be able to keep himself in video games; according to the same filing, Musk has achieved 50 percent of the goals required to earn him a $1.6 billion payday by 2022.
(Photo Credit: OnInnovation/Flickr)
In other words, just like your favorite sports stars, Elon Musk is paid for performance. In this case, his compensation (in the form of options) depends on hitting milestones like increasing Tesla‘s value by 28 percent to $43.2 billion and boosting the company’s production to 300,000 vehicles, as well as launching the Model 3.
He was given 10 years to reach these goals, from the time the stock plan was created in 2012, but has achieved more than half of them.
“Many of the requisite milestones were viewed as very difficult to achieve,” said the company in the filing, according to The Sydney Morning Herald.
OK, But Why $37,584?
Many CEOs take smaller annual salaries, often $1, in order to skip paying higher tax rates. But that’s not the only reason top executives opt for lower pay.
“Stock growth and capital gain is a lot more attractive and is taxed much more favorably,” writes Robert W. Wood at Forbes. “Besides, offering to work for a pittance can be a shrewd move. It shows current and prospective shareholders what you’re about.”
Pay for performance shows not only confidence in one’s skills, but commitment. When Mark Zuckerberg or Larry Ellison opt for a $1 salary, they’re telling the shareholders of Facebook and Oracle that they’ve got skin in the game. Their fortunes are tied to the company’s fortunes.
For CEOs at their level, it usually works out. Last year, Mark Zuckerberg and Larry Ellison both made the top 10 list of Forbes billionaires.
But Musk’s salary isn’t $1 – it’s a very specific number, even if he doesn’t take it. Where does $37,584 come from? It’s based on California’s minimum wage, according to MarketWatch.
Whether you see that as a charming gesture or an eye-roll worthy stunt depends a lot on how you feel about CEO pay in general. But one thing’s for sure: Elon Musk is never going to have to live on his nominal salary, should he ever decide to take it.
Want to learn more about what it’s like to work at Tesla or SpaceX for employees who don’t get the fanciest headset at the launch? Check out PayScale’s report, Connecting the Dot-Coms, which compares top tech companies on factors like pay, job satisfaction and meaning, and job stress.
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