Tesla CEO Elon Musk received almost $6.7 billion in compensation in 2020 — earning the tech entrepreneur over 11 times more than the country’s next highest-paid chief executive, a recent analysis found.
Musk’s massive pay came in the form of stock options that give him the right to purchase shares of Tesla at a pre-set price, as opposed to a salary or cash bonuses.
For Musk to receive the options, Tesla had to hit various business targets based on revenue growth, stock price and other figures that were spelled out in a 2018 pay package that was approved by shareholders at the time.
The electric carmaker’s stratospheric 740 percent rise in stock price in 2020 unlocked Musk’s ability to exercise his stock options — and cemented him at the top of Bloomberg’s annual Pay Index.
Those kinds of massive pay packages that are tied to the stock performance and other lofty business performance metrics are known as "moonshot packages" as they’re meant to incentivize executives to boost the value of the company they manage.
Bloomberg noted that these kinds of awards have become more common since Musk’s unusually massive one was approved in 2018.
At least 15 executives reportedly got awards worth $100 million or more last year, up three-fold from when Musk got his. Companies that have implemented similar award packages include Restoration Hardware, Paycom Software and JPMorgan, Bloomberg reported.
But Musk’s pay for the year was so uniquely gargantuan that the list includes a button that allows readers to "Scale without Elon Musk."
Musk’s massive payday has now totaled him a cumulative $33 billion in on-paper gains so far — and has put him at the top of Bloomberg’s annual pay list for three consecutive years.
The second-highest-paid executive on Bloomberg’s list was Mike Pykosz, CEO of Oak Street Health, who received $568 million in a mix of salary, bonus, stock awards, option awards and perks.
All of the top ten highest-paid CEOs are men and most of them are white. Only five of the country’s 100 top-paid executives last year were women, according to Bloomberg.
Musk’s sky-high pay package and the rising popularity of so-called pay-for-performance packages comes as, by some measures, economic inequality between executives and rank-and-file workers reaches an all-time high.
According to Bloomberg, the median ratio between the pay for S&P 500 CEOs and their typical employees rose to 182 in 2020, up for the third year in a row. Some firms logged ratios in the thousands, Bloomberg noted.
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