Elon Musk's 2020 salary situation might be misunderstood due to Tesla's past reporting of his potential wage if he earned California's minimum wage. However, the truth is Musk didn't accept any salary that year. Tesla announced on late Friday that they had abolished the collection and quantification of Musk's basic wage beginning May 2019, upon his request.
Back in 2018, Musk's hefty options plan was publicized, but it was when shareholders approved the deal granting him stock options that the value was estimated at 2.3 billion US dollars. This estimation, calculated using a widely recognized method, was regarded as conservative since it placed the option value at a mere 2.3 billion US dollars.
Based on the revenue-sharing agreement, Musk has the privilege to buy options for up to 101 million shares at a strike price of 70.01 US dollars per share. These options are split into 12 equal parts, each equaling approximately 8.4 million options, depending on Tesla achieving financial milestones and specific stock price targets. All these benchmarks were easily achievable in 2020, with Tesla's stock soaring 743%, making it the US stock with the highest price growth and the world's most valuable car manufacturer.
Achieving certain financial milestones permitted Musk to make four option batches non-expiring, which in turn permitted him to purchase 33.8 million shares at a price of 2.4 billion US dollars at the close of trading on Friday. At current market value, Tesla shares are around 21.9 billion US dollars, with the shares' value increasing with further financial milestones reached in 2021.
Two more financial milestones were achieved by Tesla in 2021, thus granting Musk the right to acquire an additional 16.9 million stock options. At current prices, these options are estimated to be worth 10.9 billion US dollars.
The business, which boasted record earnings for the second quarter in a different filing, has a high chance of achieving three more milestones, potentially equating or exceeding Musk's unexpected options gains in 2021.
It's typical for executives awarded stock options to exercise them later, either during their departure or when the options expire. However, Musk seldom sold Tesla shares during his tenure, owning 170.5 million shares directly and having the right to acquire an additional 73.5 million shares, granting him control over 23% of the company.
Musk is among the wealthiest men globally, largely thanks to his Tesla shares and a majority shareholding in SpaceX, where he serves as CEO. As of the Forbes real-time billionaire track, Musk's net worth is assessed at 186.7 billion US dollars, making him the second-richest individual globally, after Jeff Bezos at 190.7 billion US dollars. Bernard Arnault and his family, CEOs of the French luxury goods company LVMH, hold the top position on the list with a net worth of 201.6 billion US dollars.
Calculating the exercise price of Tesla shares and options, Musk's Tesla shareholding is worth 171.3 billion US dollars. However, Musk's decision to not accept a salary lead him to take out substantial loans. In Tesla's latest SEC filing, it was mentioned that 88 million of Musk-held Tesla shares were pledged as collateral to secure certain personal debts.
As of the last trading day, the value of these pledged shares was around 63 billion US dollars. The number of shares pledged as collateral has decreased from the April disclosure by 4 million shares.
