Tesla Seeks Shareholder Approval for Elon Musk’s Record-Breaking Pay Package of 56 Billion Dollars
News Mania Desk / Agnibeena Ghosh/18th April 2024
Tesla, the electric vehicle (EV) giant, is once again pursuing shareholder approval for a monumental pay deal designed to reward its CEO, Elon Musk, with what could be the largest compensation package in corporate American history, valued at $56 billion (£44.9 billion).
This proposal, which was initially set in 2018, is now back on the table for shareholder consideration. However, it faced a setback earlier this year when a US judge rejected the deal, criticizing it as an “unfathomable sum.”
The revival of this pay package comes amidst recent announcements by Musk regarding plans to implement workforce reductions, aiming to cut over 10% of Tesla’s global staff. In a memo to employees, Musk acknowledged the difficulty of such decisions but emphasized their necessity.
Notably, Musk’s proposed compensation does not include a conventional salary or bonus. Instead, it hinges on Tesla’s market value reaching up to $650 billion within a decade, with the company’s current market cap standing at $500.36 billion.
The 2018 pay deal faced significant scrutiny, particularly from Delaware-based Judge Kathaleen McCormick, who deemed it unfair to shareholders. Judge McCormick criticized Tesla directors for potentially being swayed by Musk’s charismatic persona and failing to adequately inform shareholders.
In response to the court’s ruling, Musk expressed his displeasure and even threatened to relocate Tesla’s headquarters from Delaware to Texas. Now, Tesla is seeking shareholder approval for the proposed pay package once again, alongside a request to relocate its headquarters.
Robyn Denholm, Tesla’s Board chair, defended Musk’s compensation package, highlighting that Musk has not received any pay from Tesla for the past six years. Denholm emphasized the board’s disagreement with the court’s decision, asserting that it does not align with corporate law principles.
While Musk’s compensation for 2023 stood at $0, as indicated in the recent regulatory filing, the billionaire CEO primarily receives compensation through stock options, foregoing a traditional salary from the company.
Tesla’s decision to revisit the 2018 pay package comes amidst challenges for the company, including lower-than-expected EV deliveries and ongoing issues with product recalls. Additionally, Musk has faced personal controversies, including involvement in social media controversies and safety concerns related to Tesla vehicles.
Despite these challenges, Musk’s wealth continues to soar, with estimates from Bloomberg and Forbes placing his net worth between $198 billion and $220 billion as of November 2023, solidifying his position as the world’s wealthiest individual.
