In 2016, Tesla’s Elon Musk Posted Largest U.S. Automotive CEO Compensation By Margin of More Than $1 Billion

Elon Musk


Elon Musk

Elon Musk

Tesla pays him just minimum wage, which he refuses to accept, yet somehow Elon Musk managed to make $1 billion more than the next highest compensated U.S. automotive CEO.

Interesting, to say the least.

Musk’s salary direct from Tesla is minimum wage, which amounts to basically nothing in the grander scheme for Musk, so how did he end up the highest compensated U.S. automotive CEO?

It’s stock options.

As Automotive News states:

“The Tesla Inc. CEO, who usually sits at the bottom of the list because of his penchant for requesting — and refusing to take — California’s minimum wage, posted the largest total CEO compensation by a margin of more than a $1 billion. Musk exercised $1.34 billion in stock options set to expire in 2016, according to the Automotive News/Equilar CEO Compensation study.”

“His pay increased by 3.6 million percent.”

Quite the annual raise there.

Another look at Tesla Model 3 001 – that ‘rolled off the line’ sometime on Friday/Saturday

Automotive News adds:

“However, Musk’s reported total compensation “was not actually received in cash upon these exercises,” a Tesla proxy statement said. Musk sold $593 million in stock, which was used “solely in order to pay … income taxes related to such exercise,” according to the proxy.”

Kinda confusing.

Musk’s pay increase comes mainly from meeting multiple board-set goals. It’s all part of a long-term plan set by the board in 2012. Automotive News states:

“Musk exercised options on 6.7 million shares in 2016, averaging about $194 per share in gains for $1.34 billion.”

“As of April 20, the date of the proxy filing, Musk had reached eight market capitalization milestones and six operational ones.”

Those goals include:

  • Model X alpha and beta prototypes
  • Model X production
  • Model 3 alpha and beta prototypes
  • Cumulative production of 100,000 vehicles

Getting paid to perform and to achieve goals. Makes sense to us.

Behind Musk’s $1.34 billion in compensation and in the number two spot among automotive CEOs was Thomas Lynch of TE Connectivity. He made a paltry $32.1 million. The highest compensated CEO out of the Big 3 was Mark Fields (no longer Ford’s CEO) at $16 million. Chump change compared to Musk’s $1.34 billion.

Source: Automotive News

Categories: Tesla

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33 Comments on "In 2016, Tesla’s Elon Musk Posted Largest U.S. Automotive CEO Compensation By Margin of More Than $1 Billion"

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GO MUSK GO get rich saving humanity instead of destroying humanity.

This is why some people slave away at startups. For each story like Musk, there are countless people who have nothing to show for all their work.

It sounds like what Musk exercised (ie, cashed in) was just to pay the income tax on granted shares. At over 50% tax rate (US + CA), $600M would just about cover the tax on $1B.

Gee, I wonder what they’re going to do with all that money? Build schools? Help the poor? More likely, they’ll use it on sex (get in people’s bedrooms), drugs (lock up people), and bombs (bigger “offense” budget).

You got it all wrong Musk Was Never “GRANTED” Any Shares Period!”ZER0 Nothing” ..Musk Got “SHARE OPTIONS” which is “TOTALLY DIFFERENT” It means that he “PAID” for Them “OUT OF POCKET” At the “Then” Market Price when he got the “SHARE OPTIONS”” ie: if shares were $195.00 ps Back when he got the “SHARE OPTIONS” That is what he paid for them Per share today or on the Due Date..Fortunately Share Prices went Up Because of His Smarts & Hard Work , BUT, They could Have Gone Down Too….

What is all wrong? Whatever you call it, Musk “made” $1.3B of which about $600M was tax. What actually happened is probably he exercised the options (converting from options to ownership) which amounted to about $1.3B of profit. He actually sold about $600B worth to convert to cash so he can pay the tax.

Come to think of it, why is his tax so low? At $1.3B and 39.6% US = $530M, and remaining $809M at 13.3% CA should be $107M for a total of $635M. Is he no longer CA resident? If not, he saved over $100M by moving out of CA!

Musk was granted those options though so he had a $0 purchase price. So he didn’t really “pay” for these like typical options. He exercised them and then sold enough shares to cover the taxes associated with exercising those options.

I don’t understand. If Elon doesn’t have to pay for the stock, then how are they “options”?

I am not a “financial guy” and so I can’t be sure, but my understanding is these were options to buy stock shares at a discounted price. Not freebies!

I think he meant a zero price for the option, not a zero dollar strike price. But we don’t even know if these were put or call options. I would guess the normal option grant will be a call with a striking price at or above the current stock price. Hence they are initially worth nothing, but become valuable if the stock goes up.

So basically if today’s price is 100 and I grant you the option of buying at 110 before 2021 (by buying those options in the market) you’d make 200 per share if the stock rose to 300.

So Tesla pays him minimum wage, it’s the stock speculators that pay him the big bucks as a side affect of their own greed.

I can live with that arrangement.

Elon is getting rich off the TSLA short crowd. I, too, can live with that!

At least Elon Musk is producing stuff with a wow factor like rocket ships tunnels and electric cars.

Most CEO’s kind of sit around and don’t really invent anything like that.

Most CEO’s have profitable companies though.

SOOO Many UN-INFORMRED and/Or Bashers I cannot Believe it! Musk is “PUTTING ALL THE MONEY BACK INTO TESLA TO GROW THE CO. THAT IS WHY HE SHOWS “NO PROFIT” and takes no pay..Unlike All Other CEO’s That “ROB the Company Banks On regular Basis” & They themselves take $$$Millions$$$$ In Bonuses , So, One year they’re Rich The next year they’re Broke. Ie.. GM Chrysler and so on..

Just sit around, huh? I’m sure that’s why the board and stock holders are so eager to pay millions of dollars for some doofus to sit around and do nothing.

Speaking of sitting around, what does Sergio of FCA do everyday besides recalling cars and begging to be merged?

You are a Musk Basher, Read the article…He refuses money from Tesla Period! Nobody has done
a thing for Musk Not the Speculators Not the share Holders “NOBODY” The stocks Goes up On “MUSK’S MERITS” , His Smarts #1 & Hard work #1 !! ..Without Musk at the “HELM” Tesla stock would BE WORTH $10 a Share ..He is the Braun & the Brains of it all, Tesla ,Spacex, Solar City , Boring Co. Etc . MUSK HAS MADE SO MANY PEOPLE SO MUCH MONEY IT WOULD BLOW YOUR MIND, IF YOU KNEW ANYTHING , EVERYONE IS OBLIVIOUS TO THIS FACT..Just as a small Example Look at the BILLIONS Toyota & Mercedes made made off Tesla Stock., just to mention a few…

“He refuses money from Tesla Period!”

Relax. Options have value, and are compensation. I have no problem with it, but Tesla would be a richer company, by 1bn+, if it didn’t sell $195 shares to Elon but instead sold them on the open market to raise cash.

Now, if not doing so caused Musk to walk away..

Tesla fanboys never cease to amaze me. Even when someone is NOT bashing Musk, they get verbally assaulted for not venerating him enough! Utterly bizarre.

Musk takes the biggest Risk of all because the stock also go Down doesn’t always go Up. Most CEO’s ie..Lee Iaccoca Took “FREE SHARES” in lieu Of Pay..Not Share Options..Elon took Share Options that he Later Had to exercise “at his Own Expense”..Where as Iaccoca Sold The Free shares That were “Granted” to him in Lieu of Pay Unlike Musk Who Bought & paid for his shares , Iaccoca Sold Them & Had ZER0 $$$dollars of his own Money In them..Elon doesn’t get enough Credit for His Honesty , Hard Work , And The Genius that He Is..He Has Made History in Rocketry when Others said it couldn’t be Done.

He’s underpaid! I think he’s the most important living human being, he has made huge contributions to a sustainable future for all of humanity. We should just write him a blank check, he has repeatedly proven he will spend the money wisely, even brilliantly! Can I just give him my taxes? I would feel much more confident than giving it to the IRS!

I think you’re being sarcastic, but I agree about IRS. WTF did they do to deserve almost half his earnings? While Musk had sleeping bag in factory and not spending valuable time with his kids, IRS just sat around waiting to collect on his labor, then give the biggest portion to “war” department. Musk basically worked almost 5 months a year for the IRS.

Gee I don’t know what government does except provide a safe, well-regulated legal environment where an immigrant can grow a business and become master of the world.

Now before you slam me, I agree that yes there is Government waste, corruption, fraud abuse and way to much spending on wars. But a stable, free environment to conduct business is worth a lot. We can disagree about exact tax rates, but I am quite tired of general government bashing. There are plenty of specific things to bash.

Perpetual war is not for providing safety. Ask yourself this: when does the war on terror end?

Fact is, we will kill many innocent people and call it “collateral damage” as long as they collect enough tax to do so. As long as our war funding is huge (next 8 highest spending nations combined), more taxes are just nonsense.

Even if taxes are currently used for “security”, guys like Prez Dump will divert more tax money from peaceful endeavors (eg. EPA, NIH) for war funding like he did recently.

For sure, if the US would exchange the NASA budget and the military budget, the US would no less be a nuclear power but this time putting a city on Mars would be feasible in a decade instead of a century. That would be way more interesting and constructive. It would also rally people around the US worldwide instead of the widespread aggressivity and resentment we see right now.

THE TRUTH IS, “WE ARE ALL EMIGRANTS IN THIS COUNTRY EXCEPT FOR THE NATIVE INDIANS THAT WERE ROBBED OF THEIR LAND & TAKEN ADVANTAGE OF”. Americans should thank GOD that they have a Guy like Elon Musk creating tens of thousands of Jobs with more coming & for Playing a BIG Part in making America Great ..

I wonder if you think that everyone who doesn’t spend time with their kids and are workaholics should not pay their share to build our community?

The taxes should rather be higher for earning more. Or do you expect those poor billionaires to starve if they suddenly had to survive on a few hundred millions instead of a billion?

The range should rather be from 10-20% for the lowest income bracket to 70-80% for the highest income bracket.

Currently, about half the US population pay zero federal income tax. If you suddenly tell them that they must pay 10-20%, they’ll say that’s a vast right wing conspiracy.

As for “rich”, you pretty much destroy their incentive to work too hard when you take away 80% of their lives. Startup means you pretty much work from the moment you wake up to when you go to sleep at night (ie, the entire life). Then everyone goes for 9 to 5 job at the DMV rather than creating the next Tesla.

And finally, you must love perpetual war, because that’s precisely what the biggest chunk of tax money is for.

“As for ‘rich’, you pretty much destroy their incentive to work too hard when you take away 80% of their lives.”

Clearly none of the millionaire entrepreneurs of the Eisenhower and Kennedy years agreed with your kleptocrat, “steal from the poor to give to the rich” philosophy, Sparky, since the top marginal income tax rate in those years was 91%. Those were the “baby boom” years in which the American economy was growing strongly, too.

Do you think foundations, like Bill and Malinda Gates, do a better or worse job than the government would, at their mission?

There’s a lot of excess in the world, but fixing it shouldn’t lean too heavily on taxes.

Yeah, how terrible that U.S. taxpayers have to pay for such things as clean drinking water, (relatively) clean air, public sewer systems, public roads, public schools, firemen, policemen, and other emergency responders, public vaccination programs, disease control centers, public hospitals and health clinics, and State aid to the elderly, the poor and the disabled.

Sparky has firmly convinced himself he would be happier living in a country with none of these things. Yet, for some strange reason, he chooses to keep living in the USA!

One might almost think he doesn’t actually believe his own right-wingnut political propaganda. 🙄

Well earned.

An “Inconvenient… Truth… to Power” due in theaters July 28th will tell us all again why Elon is worth every dollar. What is before us all is the locking in of large quantities of CO2 such that we can no longer escape the forever warming of our planet, until we are all extinct. To most of us reading here, it is a no brainer, but good to know Elon has us all heading in the right direction for all the right reasons. Our survival long term. Dave K above said it best..Elon is the most important living human being! No doubt.

I can’t wait to hear what new companies Elon launches with his new wealth.

Exactly what I was thinking.

I think :
– strengthen infrastructure and politics to get Tesla vehicles a better foot-hold in America.
– strengthen his other initiatives : SpaceX to further his vision on Mars, Boring company R&D, Hyper loop applications.

What Elon is achieving is the biggest energy change in the last 100 years from this tiny company against all the major car manufactures.

It is not a easy task, I don’t believe there are that many people in the world is able to do it. He deserved every single penny.