Elon Musk Becomes World’s Richest CEO With $0 Salary

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Elon Musk is now recognized for his ambitious bets, but the Tesla CEO is now backing with his own net worth: Tesla announced Tuesday that it would return Musk nothing for the next 10 years- no salary, bonus, or equity, unless the electric car company almost doubles in value.

Before praising Musk for his plausible selflessness, though, it’s worth noting that the billionaire, who has toiled as Tesla’s chairman since 2004 and as its CEO since 2008, has been getting along just fine despite never receiving a salary as long as he has been with the company.

Indeed Musk, worth an estimated $21.5 billion, will once again refuse his annual paycheck of $56,000 in 2018 and the decade thereafter.

Under the new payment plan, however, Musk could actually become much, enough richer—and so could Tesla stockholders.

To earn any compensation going forward, Musk must grow Tesla, whose current market capitalization is about $59 billion, to $100 billion in market cap, and also increase its revenues or adjusted earnings (before interest, taxes, depreciation and amortization, a.k.a. EBITDA) by at least 70%. That would satisfy the first milestone of the 12-level compensation ladder, allowing Musk to collect stock options worth an additional $1 billion.

But Musk also has the opportunity to collect a significantly bigger windfall. If Tesla’s market value reaches $650 billion by 2028 and if the other financial measures multiply between 15 and 21 times- Musk can keep all dozen tranches of stock options, netting him an additional $55.8 billion, according to the company.

Musk’s real reward would be even greater. After all, the CEO is also Tesla’s largest shareholder, and if he hits all 12 performance milestones, the company calculates Musk would own as much as 28.3% of Tesla. With that large a stake of a $650 billion company, Musk’s net worth would surge to $184 billion in Tesla stock alone—potentially making him the richest person in the world.

The world’s wealthiest person is currently Amazon CEO Jeff Bezos, whose $108 billion worth of Amazon stock makes up the lion’s share of his net worth. Musk’s maximum stock option award would boost his net worth—even before factoring in his ownership in his other company SpaceX—above that of Bezos.

While money is a powerful incentive, it’s not clear how much the incremental awards have driven Musk’s performance at Tesla. Besides forfeiting a salary, Musk also has yet to exercise any of the stock options he has collected as part of his previous compensation agreement from 2012, despite having achieved nine out of 10 milestones required to receive the maximum amount. Of the Tesla stock he currently owns (some 33.6 million shares), Musk acquired the vast majority of it before Tesla even went public in 2010.

The new compensation scheme also incentivizes Musk to hit different types of targets than he has in the past, which critics worry will come at the expense of other achievements. Since 2012, Musk’s stock awards have depended not only upon Tesla reaching certain market valuation thresholds (all of which it has fulfilled), but upon accomplishing 10 operational goals, including rolling out its first Model X and Model 3 cars, and also producing its 300,000th vehicle.

By contrast, the new pay plan encourages Musk to focus on increasing sales, profits and the Tesla stock price without holding him accountable for meeting production quotas.

It also untethers him from certain milestones that have remained stubbornly elusive—for example, the only outstanding hurdle from the 2012 agreement which Musk has failed to meet: The requirement that Tesla maintains a gross margin of at least 30% for four back-to-back quarters. The last time Tesla’s porcine margin was that high was the first quarter of 2012.