Tesla shareholders voted in favor of restoring Elon Musk’s 10-year pay plan, valued at $44.9 billion. This all-stock package rewards Musk for meeting milestones such as increasing Tesla’s market value, pretax income, and revenue. Despite a Delaware judge previously tossing out the package, citing flaws in the approval process, the company argues that Musk deserves the pay due to his role in turning Tesla into the top-selling electric vehicle maker globally.
Even though the median CEO pay in the S&P 500 last year was $16.3 million, which would amount to $163 million over a decade, Musk’s earnings under his pay plan would still be 275 times greater. In comparison, other top CEOs, such as Hock Tan of Broadcom Inc. with a package valued at $162 million, pale in comparison to Musk’s potential haul of 304 million shares worth almost $45 billion. While Musk technically received no compensation last year, his pay could increase significantly if his package is approved.
The process for Musk to access his stock options is expected to be lengthy, with Tesla likely seeking a judge to revisit her decision following the shareholder vote. If the judge does not change her ruling, the company may appeal to Delaware’s Supreme Court, prolonging the process further. Musk’s pay package, the largest awarded to a U.S. public company CEO, remains substantially above what other chief executives have received.
The comparison between Musk’s potential earnings and the median pay of Tesla workers highlights the vast disparities within the company. While the median annual pay of a non-CEO Tesla employee was $45,811 last year, Musk’s pay under the approved package could reach billions. This stark difference emphasizes the ongoing debate surrounding income inequality within companies, especially when comparing CEO compensation to that of the average worker.
The controversy surrounding Musk’s pay package is emblematic of broader discussions around executive compensation and wealth inequality in the U.S. Despite the discrepancy in pay between CEOs and workers, Musk’s accomplishments at Tesla and the resulting increase in the company’s market value are factors driving the argument for his substantial compensation. As the legal battle over Musk’s pay continues, the outcome will have implications not only for Tesla but also for the larger conversation on corporate governance and income distribution.
