What Happened: The billionaire entrepreneur explained how he does not draw any salary from Spacex and Tesla and that his taxes are tied to Tesla stock options and the tax rate on them when exercised is quite high.
Musk was speaking to New York Times columnist Kara Swisher at the Code Conference in Beverly Hills, California.
"With respect to my personal taxes, I don't actually draw a salary and my cash compensation is basically zero," he told Swisher, adding "I do have stock options."
“Just before my stock options expire, I am forced to exercise and my tax rate is 53% and it's not particularly low,” Musk said.
“It's gonna go up next year to like 57% or something. I have a bunch of options expiring next year. That huge block of options will sell in the fourth quarter.”
Musk also said SpaceX’s government contracts have helped taxpayers save billions of dollars.
“If you look at all the contracts that we won, we have won them because we have the best price — a better service at a lower price — they were not just handed over to us."
“For example, our price for Lunar Lander was half of BlueOrigin and Lockheed Martin’s... so we saved taxpayers $3 billion relative to that contract.”
The ProPublica report had in June noted that Musk had paid no tax in 2018. The report had noted he paid his due in 2016 when he exercised more than $1 billion in stock options.
Musk said there was just "one year where I think my taxes were basically zero and the reason for that was because I had overpaid taxes the year before they forgot to mention that," adding that ProPublica wasn't "interested in the truth."
Why It Matters: Musk does not draw any salary from Tesla and has a compensation plan that gives him 20.3 million stock option awards, divided into 12 tranches of 1.69 million shares each.
Musk adds stock equal to 1% of outstanding Tesla shares every time certain milestones are hit, as per the compensation plan that was approved in 2018.
Price Action: Tesla stock closed 1.74% lower at $777.56 a share on Tuesday.
Click here to check out Benzinga's EV Hub for the latest electric vehicles news.
Photo: Courtesy of Steve Jurvetson via Flickr
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.