Elon’s salary is $1. He basically works for free.

However, he gets stock options. Stock options are like an IOU for stock purchases.

Let me explain, for people who don’t know about this stuff:

Let’s say Tesla stock is $1,500. Elon could buy 1,000 shares for $1.5 million today but the company gives him (and all other employees) stock options.

These options allow him to buy shares for $1,500 later contingent on certain conditions.

For most employees, the condition is just that they stay working at Tesla. As long as they do, they can buy shares at $1,500 any time, even if the price goes up to $3,000.

Elon’s options vest based on market cap, revenue, and profitability milestones.

So let’s say Elon does a great job and the stock goes to $3,000.

They say great you hit the goal, shareholders got rich, and now you we’ll let you buy 1,000 shares for $1,500 even though it’s trading at $3,000. That was the price when we made the deal.

The benefit of the IOU is that if the stock tanks, you don’t execute the options and it saves you money.

If the shares go up, you could buy shares and immediately sell them for twice as much.

Doesn’t cost the company any cash, actually increases cash. He’s paid through dilution

stock based compensation is deducted from net income and impacts profitability though, on paper

also Elon isn’t planning to sell any of these shares and can’t for five years, so the effect on shareholders wouldn’t be felt for some time. could actually be positive short term