In 2018, Elon Musk negotiated a controversial payment package (pdf). Tesla’s CEO agreed not to receive any salary or bonuses in exchange for a performance-based compensation plan. Each time Tesla’s market capitalization surpassed a milestone, starting at $ 100 billion, Musk would receive Tesla stock options up to a $ 650 billion market capitalization. Each payday would be worth hundreds of millions – or even billions – depending on the stock’s luck.
At the time, observers doubted that the $ 54 billion electric carmaker could enrich Musk as much as the planned pay package. Those doubts are gone.
On January 7, Elon Musk overtook Jeff Bezos as the richest human being in the world with an estimated net worth of $ 185 billion, up from just over $ 27 billion in 2020. His wealth was driven by the meteoric price of Tesla shares, now valued at $ 773 billion, it has increased sevenfold since last year.
Bezos’ wealth has accompanied Amazon’s appreciation in a long and steady rise, but has stagnated along with the company’s stock price.
Tesla, meanwhile, rose with the strength of its global car sales, an extremely popular brand and Musk’s vision of a global energy and transportation powerhouse. Today, the company is worth more than all the nine largest automakers in the world – combined. All of this is part of Musk’s 2006 “secret” master plan to sell affordable electric vehicles along with zero-emission power. And let’s not forget the Musk Master Plan, Parte Deux: ubiquitous electric vehicles, sunroofs and safe and autonomous robo-taxis.
Although the company’s financial results do not necessarily support such a stratospheric valuation, Musk argued that the company’s stock price is about the future. “Tesla is absurdly overrated if it’s based on the past,” Musk tweeted in 2017, a time when Tesla was only worth $ 37 billion. “The price of a share represents risk-adjusted future cash flows.”