Tesla is once again making headlines with its proposed $56 billion pay deal for CEO Elon Musk, which could be the biggest in corporate American history.
Shareholders are being asked to vote on this record-breaking compensation, originally set in 2018. This comes after a US judge rejected the deal earlier this year, calling it “an unfathomable sum.”
The timing of this pay deal proposal is interesting, as Musk recently announced plans to cut over 10% of Tesla’s workforce. In a memo to staff, he expressed his reluctance but emphasized the necessity of the decision.
The 2018 pay package for Musk includes no salary or bonus, with rewards tied to Tesla’s market value reaching up to $650 billion over a decade. Currently, the EV company’s stock is valued at $500.36 billion.
Delaware-based Judge Kathaleen McCormick had previously ruled the pay deal unfair to shareholders, noting that Tesla directors may have been influenced by Musk’s celebrity status. Musk, in turn, threatened to move Tesla’s headquarters from Delaware to Texas in response to the ruling.
The company is now seeking shareholder approval for both the relocation and the 2018 pay package re-approval. Board chair Robyn Denholm defended Musk’s compensation, stating that he has not been paid for his work at Tesla for the past six years, calling it fundamentally unfair as per feedback from stockholders.
Tesla is also planning to appeal the court ruling while navigating a period of declining EV deliveries, leading up to its upcoming quarterly earnings report.
Musk, who faced challenges last year with car recalls, controversies, and issues with his social media platform X, remains one of the wealthiest individuals, with estimates of his net worth ranging from $198 billion to $220 billion in November 2023.
