Cars and Drivers

Tesla Paid CEO Musk Minimum Wage of $37,584

Douglas A. McIntyre

Published: April 16, 2016 6:49 am

Last Updated: January 13, 2020 10:42 am

Tesla Motors Inc. (NASDAQ: TSLA) paid CEO and founder Elon Musk $37,584 last year, which is the California minimum wage. It is not unusual for founders who own large pieces of their public companies to take small compensation. Apple Inc. (NASDAQ: AAPL) CEO Steve Jobs and Facebook Inc. (NASDAQ: FB) founder Mark Zuckerberg had periods during which they were paid $1 a year. Each could afford the low pay, because of the massive value of the of the companies they ran or run coupled with their stock holdings.

Musk’s compensation on a cash basis is even lower:

The base salary for Elon Musk, our Chief Executive Officer, continues to reflect the current minimum wage requirements under California law, and Mr. Musk still does not accept this salary.

Musk owns 26.5% of Tesla, according to its proxy. The value of that holding is worth approximately $8 billion.

Tesla pays a very small amount to its six directors, at least based on cash compensation that was spread from $20,000 to $45,000, depending on membership in board committees. However, each has stock options and stock grants with total values of over $4.5 million.

Even at such a low annual compensation, there are risks to Musk’s role in Tesla, as the company’s management points out in its 10-K:

We are highly dependent on the services of Elon Musk, our Chief Executive Officer, Product Architect, Chairman of our Board of Directors and largest stockholder. Although Mr. Musk spends significant time with Tesla and is highly active in our management, he does not devote his full time and attention to Tesla. Mr. Musk also currently serves as Chief Executive Officer and Chief Technical Officer of Space Exploration Technologies, a developer and manufacturer of space launch vehicles, and Chairman of SolarCity, a solar provider.

Based on that warning, $37,584 may become very expensive.