South African-born Elon Musk is the most highly compensated chief executive in the world, according to Forbes’ calculations. The platform calculates that he was paid $11 billion in 2020 all in Tesla stock options awarded to him as part of the compensation plan he signed with the electric carmaker in 2018.
Forbes reports that the plan was worth $2.3 billion when it was first signed and was spread over a decade. However, the plan did not kick in until 2020. The plan, which was first drafted in 2018, was based on Tesla hitting a breakthrough for market capitalization and earnings before interest, taxation, depreciation, and amortization.
Per the pay package, Musk is entitled to options that will allow him to buy a total of 101.2 million Tesla shares at a split-adjusted price of $70 per share. What is more, the compensation is divided into 12 tranches.
“The first four tranches of Musk’s options awards vested in 2020, as Tesla hit various market capitalization and operational milestones and its stock increased sevenfold, boosting Musk’s fortune astronomically,” Forbes reports.
Bloomberg Pay Index reports Musk’s earnings made him the highest-paid U.S. executive for three conservative years. His earnings put him ahead of Chad Richison, CEO of Paycom, who earned $211 million in compensation.
According to Forbes, “One caveat, however, is that Musk must hold the newly awarded Tesla shares for five years, according to filings. So while he has the right to exercise a total of 33.77 million options from his 2020 awards, he can’t immediately turn around and sell those shares.”
In January this year, Musk saw his fortune rise to $195 billion, making him the richest man on earth, according to Bloomberg Billionaires Index.
The Space X and Tesla founder was pushed to the top spot after shares in Tesla rose by more than 6 percent at the time.
Musk started 2020 worth about $27 billion and was not among the top 50 richest list. However, he passed Warren Buffett to become the seventh-richest person in July that year. He gained more wealth than Bill Gates to become the second-richest person in November and has since gained more wealth.
Last year, Musk’s Space X launched two crewed missions to the International Space Station, the first of it in the U.S. since NASA retired its space shuttle fleet in 2011, according to space.com. In all, Space X launched 26 missions in 2020.