Elon Musk’s huge pay package faced rejection from a Delaware judge this year. Now, Tesla shareholders have had their say. The vote on Thursday saw shareholders approve Musk’s pay package. This 10-year package, tied to financial targets since 2018, is valued at $46.8 billion.
Comparing Musk’s compensation to other CEO pay packages shows its enormity. The payout is remarkable not only for its sheer size but also because of the control it would give Musk, potentially increasing his stake in Tesla from 13% to over 20%. The package, first announced in 2018, was notably risky due to the ambitious targets Tesla set. If Musk didn’t meet these goals, he would receive nothing.
According to the current Tesla stock price and the exercise price of $23.34 per share, Musk’s pay package, earned in 12 parts based on financial milestones, would be worth $46.8 billion before taxes. This amount exceeds the GDP of many countries and the market capitalization of major corporations like Barclays and Kering. It also surpasses any CEO’s earnings from a single pay package in history.
Jason Schloetzer, a professor at Georgetown University’s McDonough School of Business, commented on the unprecedented scale of Musk’s compensation: “There is certainly no comparable in level of pay. Even if you divide it by 10, it’s still a ginormous amount of money.”
However, the shareholder vote does not guarantee Musk will receive this immense sum. The Delaware judge who initially rejected the case or the state’s Supreme Court, if an appeal is made, will make the final decision. Even if approved, it’s uncertain how much the package will ultimately be worth when Musk, currently worth $198 billion according to Bloomberg, exercises the options. Due to a lawsuit filed in 2018, Musk hasn’t received any payouts from the package yet.
When first granted to Musk in 2018, the pay package was valued at $2.3 billion. Since then, its value has soared as Tesla’s stock price rose and different parts of the options vested. This year, however, its value has dipped in line with Tesla’s share price decrease from about $56 billion earlier in January.
In any case, whether viewed in parts or as a whole, Musk’s compensation remains staggering. “When you start seeing someone making a couple hundred million — $250 million, $220 million — it seems that’s when questions and media coverage starts to happen,” noted Schloetzer. “Any way of looking at it, it’s an astronomical sum.”
