Tesla Proposes a Record-Breaking $56 Billion Pay Package for Elon Musk
Tesla is once again making headlines with its bid to award CEO Elon Musk the largest pay package in American corporate history, valued at $56 billion.
The electric vehicle (EV) giant is seeking approval from shareholders for Musk’s unprecedented compensation, initially set in 2018. This move follows a US judge’s rejection of the deal earlier this year, criticising it as an “unfathomable sum.”
The proposal comes shortly after Musk’s announcement of plans to reduce Tesla’s global workforce by over 10%, a decision he described as necessary but unpleasant in a memo to staff.
The renewed focus on Musk’s remuneration is notable, given that the proposed package includes no salary or bonus. Instead, the 2018 deal hinges on Tesla’s market value reaching up to $650 billion over a decade. As of now, the company’s EV stock is valued at $500.36 billion.
Delaware-based Judge Kathaleen McCormick, in her ruling, deemed the pay deal unfair to shareholders, suggesting that Tesla directors, enchanted by Musk’s charisma, failed to fully inform shareholders during negotiations.
In response to the court’s decision, Musk expressed dissatisfaction and even hinted at relocating Tesla’s headquarters from Delaware to Texas. Now, Tesla is urging shareholders to approve both the move and the revised pay package.
Board chair Robyn Denholm defended Musk’s compensation, emphasising that he hasn’t received payment for his work for Tesla over the past six years, which she deemed fundamentally unfair. Denholm also disagreed with the court’s ruling, asserting that it doesn’t align with corporate law.
Musk’s compensation for 2023 stood at $0, as he eschews a salary from Tesla and instead receives compensation through stock options. Tesla suggested subjecting the original 2018 package to a new shareholder vote while still planning to appeal the court’s decision.
The re-vote coincides with a challenging period for Tesla, marked by lower EV deliveries and ongoing efforts to restore Musk’s tarnished reputation following various controversies.
Despite the setbacks, Musk remains one of the wealthiest individuals globally, with an estimated net worth ranging from $198 billion to $220 billion as of November 2023, according to Bloomberg and Forbes.
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