Musk’s payday is a lot like Tesla stock: full of hot air

By Mark Gongloff

IF YOU SPENT most of your time at your day job working on several side gigs and posting inflammatory content on social media, then you might expect to get replaced by a robot or at least brace for a serious talk with your manager about a pay cut. But if you’re Elon Musk, you end up getting promised annual compensation worth $158 billion to keep you motivated.

That’s how much Tesla, Inc. valued the compensation for its highly distracted and distracting, but evidently irreplaceable, chief executive officer in 2025, the company disclosed late Thursday. It’s part of a package that could eventually total $1 trillion, which shareholders approved last year “as a way to motivate Tesla’s chief executive to spend more time at the electric-vehicle maker,” as The Wall Street Journal put it.

In other words, when workers’ wages have stagnated and many of us are worried about losing our jobs to AI, Musk gets promised enough capital in one year to buy ConocoPhillips outright and still have a few billion left over for walking-around money. To be fair, the actual cash Musk pocketed last year was zero dollars because all of his compensation was tied up in equity award grants, Bloomberg News notes. He’ll get $132 billion, more than enough to buy Starbucks Corp., only if Tesla hits certain performance targets. It hit none of them last year.

That gets at one of the issues with both Musk’s compensation and Tesla’s stock price: Both are Thanksgiving Day parade balloons filled with hot air and wishes. Tesla is no longer really an electric-car maker. It’s an aspiring robotaxi/robot butler/computer-chip maker with products and profits that exist only in a mystical future promised by Musk.

Despite years of not coming true, these promises are still good enough for both Tesla’s comatose board of directors and its shareholders, who have enjoyed watching the company’s stock grow to 198 times future 12-month earnings. As my colleague Liam Denning has written, this compares with a forward P/E ratio of about 25 for the rest of Big Tech’s Magnificent Seven. Musk’s 2025 pay is about twice the Ebitda Tesla has generated since 2010, Liam notes.

As it relates to Tesla’s stock price, the Elon Musk Reality Distortion Field has been defying the laws of physics and logic for at least a decade. You should expect to go broke betting against it. But it reflects similarly perverse and unsustainable trends in the modern economy. Tesla’s market cap may never decline, but something has to give here.

US CEOs make 280 times the average annual pay of their workers, according to the Economic Policy Institute, up from a ratio of about 20 in 1965. Other companies have even begun to emulate Tesla’s “pay-to-pray” approach to keeping their bosses engaged. Tesla rival Rivian Automotive, Inc. paid its CEO $403 million last year, mostly in options, as part of a similarly incentive-driven package.

Meanwhile, workers’ annual wage increases have declined steadily for the past four years, with inflation outpacing them for much of that time. Now President Donald Trump’s war in Iran is driving fuel prices higher, with gasoline hitting $4.40 a gallon in the US, and threatening to reawaken inflation that was only recently subdued. Housing affordability has plunged since the pandemic, putting the American Dream out of reach for millions. No wonder the University of Michigan’s consumer sentiment index is at its lowest point on record.

And thanks to Musk and other Big Tech CEOs, Americans think the future is even bleaker for workers. The Mag Seven is spending $700 billion this year and possibly $1 trillion next year on ramping up AI, a technology few Americans asked for and most now fear will take their jobs and make their lives less meaningful.

Musk is a uniquely qualified talisman of these inequities, thanks partly to his moonlighting as a government official. His Department of Government Efficiency last year separated 260,000 government workers from their jobs. It gutted the US Agency for International Development, risking three million preventable deaths a year, according to Oxfam. All of this carnage was based on a promise to save the government money and eventually (that hazy future again) make Americans’ lives better. It was another promise unfulfilled. Tesla shareholders might swallow such disappointment forever. The rest of us don’t have to.

BLOOMBERG OPINION