Is Elon Musk Worth His $56bn Tesla Pay Package?

Elon Musk might, once again, get his own way. His Tesla pay deal - worth up to $56bn depending on the firm’s share price - which has now been backed by shareholders, is 75% of the entire spending for schools in England in 2024-25 (£60bn) and around a quarter of the budget for the NHS (£192bn).

Elon Musk, the CEO of Tesla

To his many admirers, Mr Musk is worth every single cent which comes his way - and shareholders agreed, with around 72% of the voting shares backing the deal. His businesses include Tesla, SpaceX, X (formerly Twitter), Starlink, Neuralink, and X.ai, his latest AI project.

“If that wasn’t the case, he wouldn’t be accomplishing the things that he is.” - Dolly Singh, former SpaceX employee

You could argue Tesla opened up the US market for electric vehicles, SpaceX has just sent the world’s most powerful rocket into space, and a man who volunteered to be the first human to be implanted with a Neuralink microchip into his brain can now control a computer using his thoughts.

Today, the $56bn question is: would this portfolio have been as successful without him?

Tesla’s Growth

You could say Mr Musk’s pay deal was really about getting him to stay put at Tesla. Prior to 2018, when it was agreed by the company’s board, there had been speculation about his future at the electric car maker. The deal was structured in such a way that if Mr Musk didn’t hit certain milestones - such as Tesla’s market value, sales, and underlying profit - he wouldn’t get paid at all.

Tesla’s market value had grown from $54bn to the $650bn goal set out in the original deal.

Though, at that stage, he was hardly digging down the back of the sofa for loose change given he was worth nearly $20bn, according to Forbes magazine’s rich list of 2018. But if he did hit certain goals, the potential payday was astronomical.

Musk’s Profile

When Tesla wobbled in 2022, it was said to be because Mr Musk had taken his eye off the ball to concentrate on X - so it was his absence rather than his presence which caused a problem. Yet his profile clearly adds massive value to these firms.

Elon Musk’s Twitter profile

Mr Musk doesn’t believe in communications teams, preferring instead to broadcast prolifically to his 187m followers directly on his social network. If you’ve got Mr Musk in your corner, your PR does itself, with mixed, but always high-profile, results.

He generates endless global news headlines from behind his keyboard, and you could argue that very, very few people have that power - publicity that money can’t buy.

Risky Business

Though shareholders backed Mr Musk’s pay package, legal experts say it is not clear if the court that blocked the deal will accept the re-vote and allow the company to restore his pay. But former Tesla backer Steve Westly told the BBC earlier this year keeping Musk is not a necessity.

“Elon is a unique visionary …but I don’t know if that means he’s essential to be running any or all of those companies today,” he said.

“No one stays on top forever, especially when you’re trying to lead seven companies at once.”

And for all the successes under Mr Musk, there have also been failures. For years Tesla didn’t make a profit at all, then a tweet about the company becoming private caused financial chaos, ending in an investigation by regulators resulting in him standing down as CEO.

Starlink has now broken even financially

Mr Musk recently claimed that Starlink has now broken even financially - but Bloomberg published a report suggesting that he had underplayed the huge cost of launching its satellite network infrastructure.

But the US has a different view about risky businesses.

“The US market is not only huge, but also more predisposed to taking big shots,” Mustafa Suleyman, who co-founded Google DeepMind and has just joined Microsoft, told the BBC.

“The UK could do with being more tolerant and more celebratory of failures,” he added.

If Mr Musk has been bruised by failure, he doesn’t show it. He is outwardly loud, dominant, and defiant.

A cake sent to Delaware, which tried to block his $56bn Tesla pay deal, emblazoned with his favourite phrase ‘vox populi, vox dei’ - the voice of the people is the voice of God.