Elon Musk, billionaire entrepreneur and minimum wage earner. Tesla disclosed on Friday that Mr Musk earned just $37,584 last year as chief executive of the electric carmaker, California’s minimum. A day after a revolt over executive pay at BP, the filing might be a welcome tonic from the new economy for the excesses of the old.
Like other low-paid workers in California, Mr Musk can look forward to a big increase in 2022. The state has just decided to impose a minimum wage of $15 an hour by then — a 50 per cent increase from today. There is a decent prospect, however, that his increase will be rather bigger.
Under an incentive plan launched in 2012, with a 10-year horizon, Mr Musk was given the opportunity to get 5.3m stock options for $31.17 a share (Tesla now trades at $254). They were to be paid in 10 tranches subject to 10 operational targets. Six related to putting the Model X and Model 3 into production. Three were for aggregate vehicle production, hitting 100,000, 200,000 and 300,000. Finally, Tesla has to make a gross margin of 30 per cent for four consecutive quarters. Importantly, each tranche is governed by a further condition — to get the payout, each time Tesla must add $4bn in market capitalisation, or $43.2bn to hit the maximum.