Elon Musk’s net worth is estimated at $185 billion.
Elon Musk, the richest man in the world, is on trial. But not because of Twitter, but because of its assets. In 2018, he received a $56 billion pay package from Tesla!
This is insanely high even compared to the highest CEO salaries. For comparison: In Switzerland, the head of Roche Severin Schwan earned the highest salary among listed companies in 2021 with 15 million francs.
In 2018, Richard Tornetta filed a lawsuit against the compensation plan on behalf of Tesla shareholders. The shareholders actually agreed to this in advance. And this despite the fact that the advisory firms Institutional Shareholder Services and Glass Lewis warned against it. The class action was then admitted in 2021.
The charge is that the board that created Musk’s compensation plan was not sufficiently independent of it. At the time, Musk’s brother Kimbal and his friends Anthony Gracias and Steve Jurvetson were on the board. So the real charge is: nepotism.
Paid in shares
How could it have happened? Tesla’s 2018 compensation plan includes so-called performance goals for Musk. If he achieves this, he will receive billions in return. Specifically in Tesla shares. And this despite the fact that he already owned 22 percent of Tesla.
This compensation plan made Musk the richest man in the world, according to the Bloomberg Billionaire’s Index. His net worth is estimated at $185 billion.
However, his true wealth is difficult to estimate. A significant portion of Musk’s wealth is invested in his space company SpaceX. As it is a private company, no detailed financial information is known about it.
For Musk as motivation
When the pay package was approved in March 2018, Tesla was still a struggling automaker. Last year, the company lost nearly $2 billion. The aforementioned compensation plan was created as a motivation for Musk to lead the company in the long term.
This includes a total of twelve blocks of shares. Milestones Musk had to meet included annual sales of $35 billion and adjusted earnings of $3 billion. Tesla achieved both in 2021.
Another milestone in the compensation plan: Musk will receive a block of stock every time the market value increases by another $50 billion, starting at $100 billion.
At the time the compensation plan was approved, Tesla’s stock market value was under $50 billion. Today, Tesla is worth nearly $600 billion! This earned Musk additional blocks of stock. At the same time, the value of the shares also increased. And Musk kept getting richer.
Originally, the plan was to be paid out over ten years. But Musk reached milestones faster than expected. In 2020, Tesla was the top performing American title and became the most valuable American automaker of all time.
The process is expected to last until the end of the week. Musk himself is expected to testify on Wednesday. A verdict is expected in the coming weeks or months.