It's official: Tesla shareholders have approved chairman and CEO Elon Musk's multibillion-dollar stock option pay proposal, which could award Musk $2.6 billion in stock options in 12 tranches, or portions.
Overall, Musk could earn up to $55.8 billion in stock and awards.
The catch is that his compensation is tied to the company's success, so Musk will only be paid if Tesla reaches a set of aggressive milestones that aim to grow the company's valuation from its current $52 billion to more than $650 billion.
When the billionaire first announced the plan, Andrew Ross Sorkin in The New York Times called it possibly "the boldest pay plan in corporate history." Supporters have said the plan will align Musk with shareholders and could greatly increase the company's value.
Musk is worth a reported $20 billion, but the official salary he currently receives from Tesla is far more modest: The CEO earns just around $37,000 per year. (Musk is also the CEO of SpaceX, which is privately held.)
If Musk had things his way, he says, he'd choose not to take a salary at all. But because California law prohibits him from earning less than minimum wage, he still draws a token salary, according to the Times.
The CEO can choose not to spend the money, however. "I don't cash it," he told the Times. "It just ends up accumulating in a Tesla bank account somewhere."
Musk's not the only top executive forgoing a big salary and tying his compensation to company stock instead. Taking an official salary of only $1 has become something of a point of pride in and around Silicon Valley.
That's because a company's stock value speaks louder than a set salary. "The dollar salary really for them is meant to signify that they have large stakes in their company. The value they're going to receive — the compensation they'll earn — is coming solely from their stock," Aaron Boyd, previously the director of governance for Equilar, a company that researches executive compensation, explained to Forbes in 2014.
In the past, Facebook's Mark Zuckerberg, Snap Inc.'s Evan Spiegel and Alphabet's Larry Page and Sergey Brin have all opted to take a single dollar in official compensation.
This is an updated version of a previously published article.
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