Tesla Motors CEO Elon Musk has flown his private jet to Washington at least 12 times since the beginning of last year—just months after Congress chastised the CEOs of GM, Chrysler and Ford for flying private jets to request public financing.
FAA records collected by FlightAware.com show that Musk’s jet, a Dassault Falcon 900, touched down in Washington June 15, 2009 – one week before the electric car maker won a guaranteed $465 million loan from the Department of Energy. Two weeks before that, Tesla began paying for the jet’s operating expenses. This worked out to $175,000 in costs for the final six months of 2009, according to a recent registration statement with the SEC (Tesla is planning to raise $100 million via an IPO).
Since Tesla started paying for Musk’s work-related flights, the CEO’s plane went to Washington four more times, touching down on June 15, Sept. 7, Sept. 27, Nov. 4 and once since the new year began, records show.
Musk also may have used the plan for business related to SpaceX, a commercial rocket-ship maker that also runs. The plane also could have been used for non-business purposes. For example, it was used in the making of the 2005 movie “Thank You For Smoking.”
An industry source says jets of similar make and age sell for between $5 million and $10 million, depending on a variety of variables, and can cost around $5,000 per hour to operate.
It is not unusual for technology company CEOs to fly privately-owned jets and expense their use to the company. Apple CEO Steve Jobs, for example, billed the computer maker $16,000 for use of his Gulfstream for the nine months ending in June 2009. Google gave CEO Eric Schmidt $106,201 for “costs related to aircraft chartered for Google business on which family and friends flew in 2008.”
But Tesla is no Apple or Google, and it’s highly unusual for a startup CEO to be recording such expenses against the company he runs.
“It’s really not normal and I don’t think it’s actually right,” says Ho Nam, a venture capitalist with Altos Ventures which does not own any stake in Tesla. “It’s okay to expense what it would have cost to fly commercial, but the difference should be covered by the person using it. It’s really about the culture and the message it sends to the rest of the company.”
If the CEO is perceived to be spending a lot of money, lower-level employees will be less likely to try to save money, Nam adds.
We left a message for Tesla this morning, but have not yet heard back.
In addition to the $465 million in federal loans, Tesla also finalized an arrangement with the California Alternative Energy and Advanced Transportation Financing Authority that exempts it from up to $320 million in California state sales and use taxes, according to regulatory documents.
These federal and state funds should benefit an array of Tesla investors, Musk foremost among them. The Tesla CEO owns 81 million shares of Tesla Motors stock (38.8%) and is slated to receive another three million shares based on options he owns that may be exercised by the end of February, documents show. He only took $1 in annual salary during 2009, but the company is required to pay him $33,280 under minimum wage laws. Moreover, Tesla awarded him options worth nearly $24 million in 2009.
Other big shareholders include Al Wahada Capital Investment, a wholly-owned subsidiary of the government of Abu Dhabi, which owns 22 million shares of Tesla’s pre-IPO stock (10.5%) and an investment fund 40% owned by German automaker Daimler and 60% owed by the government of Abu Dhabi, which also owns 22 million shares (10.5%).
CEO Elon Musk’s younger brother and Tesla board member, Kimbal Musk, owns 1.2 million shares (0.03%).
The venture capital firms associated with Tesla also have substantial stakes. VantagePoint Venture Partners owns 21 million shares (10%), Valor Equity Partners own nearly 15 million shares (7.1%), Draper Fisher Jurvetson owns 8.3 million shares (4%) and Technology Partners owns 8.2 million shares (3.9%).