Tesla Chief Elon Musk Could Still Be Paid Billions of Dollars

05:19 June 19, 2024

Tesla Chief Elon Musk Could Still Be Paid Billions of Dollars

Tesla shareholders recently voted by a large majority to approve company chief Elon Musk’s 10-year pay plan.

The plan, valued by the company in April at $44.9 billion, was even more valuable earlier in the year. However, Tesla’s stock price has fallen about 25 percent since then.

The board and shareholders first approved the plan, which gives Musk special shares of stock, in 2018. It aimed to reward Musk for reaching goals that include raising Tesla’s market value, pretax income and revenue.

But in January, a Delaware judge halted the plan. She said the process for approving it was “deeply flawed.” The court ruled that Musk controlled the company’s board and that shareholders were not fully informed.

But the company said Musk should get the pay because he turned Tesla into the top-selling electric vehicle maker in the world, increasing its market value by billions of dollars.

Even with the re-approval vote, Musk will not get the stock plan just yet. Tesla is expected to ask the judge to reconsider her decision.

If the judge does not revisit the decision, the company probably will appeal the ruling to Delaware’s Supreme Court. The process could take months.

Musk’s pay plan is the largest to a company chief of a U.S. public company. It is far above what has been given to other chief executives.

Here is how the package compares:

Median CEO pay

The Associated Press partnered with Equilar, a company that researches pay for business chiefs, to study pay for CEOs, or chief executive officers.

The study found that the median pay package for an S&P 500 CEO in the U.S. last year was $16.3 million. If you multiply that by 10 to get $163 million for 10 years of work, Musk’s earnings would be 275 times greater.

In her January ruling that struck down the package, Delaware Chancellor Kathaleen St. Jude McCormick wrote that Musk’s package, then worth about $56 billion, was 250 times larger than the median peer CEO’s pay plan.

Individual CEOs

The top earner in the AP’s study was Hock Tan, CEO of artificial intelligence company Broadcom Inc. His package, mostly consisting of stock awards, was valued at about $162 million, when given to Tan in 2023. Because the company’s stock rose in value, Broadcom in March valued the CEO's pay package, including earlier awards, at $767.7 million.

That amount is much smaller than Musk’s possible pay package of 304 million shares worth almost $45 billion.

Other CEOs identified by AP to have high pay include William Lansing of Fair Isaac Corp. and Tim Cook of Apple.

Tesla workers

Tesla says it did not pay Musk anything last year. But if courts permit his pay deal, Musk’s pay in company stock will be in the billions.

Company documents from this year say the median yearly pay of Tesla employees not including the chief last year was $45,811.

I’m Caty Weaver.

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