Elon Musk, CEO of Tesla, Space X, and Boring Company is an influential entrepreneur and technocrat. Elon Musk net worth is approximately $20 billion that makes him one of the 50 richest people on Earth.

As of now, Musk is ranked 40 in the Forbes billionaires list and the Tesla CEO made his debut to the billionaire club in 2005.

A report by Business Insider has called Musk as  the highest-paid CEO  in the U.S. and added: “Elon Musk made more in 2018 than the next 65 highest-paid CEOs combined.”

But the irony is that many of his companies such as Tesla and SpaceX in which he is the CEO are on a “cash struggle.”

That raises the question of how Musk is making these big billions and how the money is being spent.

In principle, Musk takes no salary or cash bonus from companies he is leading. In terms of market cap, his companies Space X is valued $33 billion and Boring Company $16 billion.

Tesla’s blockbuster package for Musk

The mystery behind the report revolves around a compensation package for Musk approved by Tesla’s board in March 2018.

The “blockbuster package” finalized in early 2018 mandates paying Musk $2.3 billion worth of Tesla equities over a period of 10 years if he fulfills certain conditions.

One is that he Musk must scale up Tesla’s market value from the $60 billion in March 2018 to $650 billion by 2028 at the rate of $50 billion in every 10 months.

In addition to that Musk must also stream out revenue channels and profit goals.

If these milestones are met, Musk’s total equity earnings would zoom to $55 billion by 2028 hoping that Tesla will not float any additional shares.

After Tesla board approved the compensation plan the market cap plunged to $40 billion after a series of stock declines and doubts over the carmaker’s future.

Prior to this bumper CEO package plan, Tesla offered a similar plan in 2012 bound by growth goals when it was worth $3 billion.

Since then Tesla has grown 10 times or more and Musk might have rightfully earned his stock award of $12 billion under that plan.

But the CEO has not encashed it yet.

In 2018, Musk also purchased Tesla shares worth $35 million.

Musk spends more on real estate and cars

As a workaholic boss, Musk has very little recreation outside of work and there is no big spending on holidaying or luxury outfits.

However, Musk has a fancy for costly real estate. He buys luxurious homes for which he takes loans against his equity ownership in Tesla and SpaceX.

In 2018, Musk took a loan of $61 million from Morgan Stanley for five properties in California for a 30-year term for which he is paying a monthly installment of $180,000.  GettyImages-Elon Musk Tesla CEO and chief designer of SpaceX Elon Musk in a discussion during the 2014 annual conference of the Export-Import Bank (EXIM) April 25, 2014, in Washington, DC. Photo: Photo by Alex Wong/Getty Images

The same year, he also sold one of his Los Angeles homes for $4.5 million.

According to Business Insider Musk owns $70 million real estates comprising several Bel Air properties. The Tesla boss also owns a vast collection of cars including a Lotus Espirit submarine car used in a James Bond movie.  

Tesla pays for work-related expenses

Since going public in 2010, Tesla has been paying an annual salary between $33,000 and $54,000 to Musk, according to regulatory filings. Under California’s minimum wage law, this minimum payment is a must.  

All the work-related expenses of Musk are met by Tesla. Musk uses two private jets and flies often.

In 2017, Tesla paid $746,000 for Musk’s use of the two planes.

But a majority of his flights are from one side of Los Angeles to the other to get over the city’s dreadful vehicular traffic.

Musk also contributes to charity. He has signed up for “Giving Pledge” by Warren Buffett, Bill Gates and Milinda Gates.

Among Elon Musk’s notable charity donations include $10 million to Future of Life Institute for its work in regulating artificial intelligence.