Elon Reeve Musk is the founder, CEO, CTO, and chief engineer of SpaceX. We
also know that he is a pioneer investor, CEO, and product architect of Tesla, Inc.
and one of the highest-earning business magnates, industrial designers,
and engineers. But, have you ever wondered how much this tycoon earns in a second?
Welcome to Elon Musk Zone!
In this video, we’ll attempt to generate the daily or even hourly figure he’s earning.
Tesla CEO Elon Musk is among the most charismatic business leaders.
However, he's controversial at the same time with a large army of lovers as well as haters.
Tesla and other electric vehicle stocks have rallied sharply since the beginning of 2020.
But how much does Elon Musk make a day, an hour, a minute, a second?
At the start of 2020, Musk was the 35th richest person in the world.
He's the first person in history to add over $100 billion to personal net worth in
a year. He became the first person to achieve the feat. Throughout that year, his net worth
increased by $150 billion, largely driven by his ownership of around 20% of Tesla stock. During
this, Musk's net worth was often volatile. For example, it dropped $16.3 billion in September,
the largest such plunge according to Bloomberg. In November of that year,
Musk passed Facebook co-founder Mark Zuckerberg to become the third-richest person in the world;
a week later he passed Microsoft co-founder Bill Gates to become the second richest.
In January 2021, Musk, with a net worth of $185 billion, surpassed Amazon founder Jeff Bezos to
become the richest person in the world. Bezos reclaimed the top spot the following month.
So, after Tesla’s share jumped nearly 20 percent, marking its biggest gain in more than a year,
Musk’s net worth jumped to a whopping $174 billion on the Bloomberg Billionaires Index. Now let us
dig deeper into his salary. As Chief Executive Officer at Tesla, Inc., Elon Musk made $23, 760
in total compensation. But what made him so rich with just this amount of dollars from his company?
Though around three-quarters of Musk’s wealth is derived from Tesla, he does not receive that
much of a salary. Nonetheless, Musk agreed to a compensation plan with the board. And it is
an "at-risk performance award" that "ensures [Musk] will be compensated only if Tesla and
all of its shareholders do extraordinarily well. Created in 2018, the deal stipulated that Musk
only receives compensation if Tesla reached certain market values. It was the largest such
deal ever done between a CEO and board. In the first award, given in May 2020, he was eligible
to purchase 1.69 million TSLA shares - around one percent of the company - at below-market prices.
Here we need to distinguish between Elon Musk’s net worth and income. While he is touted as the
highest-paid CEO, Musk doesn't get any base salary from Tesla. He gets stock options from the company
as part of the 2018 compensation plan that's linked to the company delivering key milestones.
There is one concrete clue when it comes to the value of Musk’s time.
Announced in January was Tesla’s compensation plan for Musk over the next 10 years. Tesla claims its
CEO will receive “no guaranteed compensation of any kind” -- we’re talking salaries,
cash bonuses, equity over time. Instead, his payout will depend entirely on performance,
namely a series of revenue-based milestones. To receive his maximum possible compensation, Musk
will need to lead the charge in Tesla’s reaching its ultimate goal: a market cap of $650 billion.
The typical formula for determining the value of time involves salary and annual earnings,
but for someone like Musk, that’s almost impossible. For one, even though his Tesla
salary is public (minimum wage in the state of California), he rarely takes it. Second,
his salary at SpaceX -- a private company -- is unknown. Finally, undisclosed capital gains and
potential dividends mean that although we have an idea of Musk’s net worth -- about
$23 billion -- we’ll likely never know his take-home earnings per year. Under the 10-year
compensation plan, Musk can purchase 20,264,042 shares of Tesla stock at $350.2 per share.
Looking at the surge in Tesla stock over the last year, it’s a fraction of its stock price.
More tranches are remaining as part of Musk’s compensation plan. The compensation plan is
based on Tesla’s market capitalization, revenues, and adjusted EBITDA. Joining the benchmark index
for US equities will put Tesla stock in the portfolios of countless index-tracking funds,
and the many managed funds that would follow suit to balance their holdings.
According to a Bloomberg report, Musk has unlocked three tranches of stocks in 2020.
After accounting for the purchase price, they represent a payout of almost $8.8 billion,
which would mean an income of over $26 million per day in the first 334 days of 2020.
Currently, Musk says he’s working 120 hours a week. That translates to just over 17 hours a day,
more than 6,240 hours per year, and, over the next 10 years, over 62,400 hours of work. If
Musk’s total 10-year payout is a theoretical $55.8 billion, that means if he sticks to the same work
schedule in delivering Tesla to its goal, every hour of his time could be worth close to $900,000.
Currently, Musk says he’s working 120 hours a week. That translates to just over 17 hours a day,
more than 6,240 hours per year, and, over the next 10 years, over 62,400 hours of work. If Musk’s
total 10-year payout is a theoretical $55.8 billion, that means if he sticks to the same work
schedule in delivering Tesla to its goal, every hour of his time could be worth close to $900,000.
Meanwhile, it would take the average UK worker three weeks, four days,
and an hour to make what Tim Cook, chief executive of Apple, makes in five minutes:
£2,606; and three weeks and three hours to earn what Jonathan Gray, the president of asset manager
Blackstone, earns in five minutes: £2,097. When the news surged that the electric carmaker will
be included in the mainstream indexes, Tesla’s CEO has skyrocketed his share-based wealth, too.
So much so, that it would take the average British person 17 weeks and one hour to earn
what Tesla’s founder and CEO Elon Musk do in five minutes (£11,600), according to new research.
But that’s just it: Even if each hour of Elon Musk’s time in office should theoretically earn
him $900,000, there’s no guarantee. That’s because Musk’s payout is entirely performance-based.
Tesla makes it clear that the CEO’s compensation is completely at risk:
If Musk doesn’t deliver on any of the contractual milestones, he will earn a grand total of $0.
Does Musk keep worldly possessions? No. Musk is known for using Twitter as a great marketing tool
and targeting legacy automakers. In May 2020,
Musk tweeted that he would sell most of his physical assets and wouldn't own any house.
A report of Gigacalculator found out that Elon Musk makes $21,030 in five working minutes. This
means he is making $140.20 in a second! Based on the average full-time salary of $48,360,
it would take a normal person 22 weeks, two days, and three hours
to make the same amount that the Tesla boss makes in five minutes.
Given the figures, how does he want to spend his wealth?
For the time being, Musk's wealth is largely in Tesla stock.
Bezos, who owns over 10 percent of Amazon, has sold off his own stock
piece-by-piece — $2.9 billion in 2019 and over $10 billion in 2020.
That still left him with almost $170 billion in Amazon stock, according to CNBC in November 2020.
Bezos has stated that his goal is to give around $1 billion per year to his rocket launch startup,
Blue Origin. Assuming Musk still only plans to spend around half his wealth on a self-sustaining
city on Mars, it seems he might only just be able to afford the low-end estimate. Musk has been
criticized for this plan before. Director Werner Herzog described it to Inverse in November 2020
as an "obscenity," while entrepreneur Jack Ma said in August 2019 that Earth "needs more heroes."
But Musk has suggested the plan doesn't cost as much as it seems.
During his August 2019 appearance with Ma, he said that the plan would require around
half a percent to one percent of the world's gross domestic product.
This figure is somewhere between the amounts spent on cosmetics and healthcare.
The World Bank estimated the world’s gross domestic product at $85.7 trillion for 2018,
which would suggest an expenditure of $400 to $900 billion. Musk described it as "a wise investment
for the future." Musk has regularly claimed he wants to use his money to fund his Mars
city goal. In May 2020, he declared he was also selling "almost all physical possessions." Later
that month, he said on the Joe Rogan Experience that possessions "kind of weigh you down."
In terms of charity, Musk's contributions have come under scrutiny. He's a signatory
to the Giving Pledge, where the world's richest commit to giving the majority of their wealth
to philanthropy. But The Guardian reported in November 2020 that his charitable foundation,
the Musk Foundation, has only given around $100 million away.
A Quartz analysis in October 2020 found Musk had donated around $257 million to the fund.
The fund had given 86 percent of its wealth to three sources, two of which were donor-advised
funds. These funds, commonly used by billionaires, are criticized for a lack of transparency.
Musk has pledged to give half his wealth to philanthropy or charitable causes.
He will have to increase his contributions if he has
any chance of meeting this goal in his lifetime — a shift he suggests would happen in about 2038.
So there you have it, folks. However, how much you might be earning right now,
just spend it right and do things right. If you find the video interesting,
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Thank you for watching Elon Musk Zone! We’ll hope to see you in the next videos!