Musk's $29b Tesla pay plan to replace disputed $56b deal

Tesla has proposed a new compensation package for CEO Elon Musk, valued at about US$29 billion in shares, pending shareholder approval at the company’s annual meeting in November.

The plan would grant Musk 96 million shares that will vest all at once after two years if he remains in a senior leadership role and holds the stock for five years, with a US$23.34-per-share purchase price.

Tesla said this package is not tied to performance targets like stock price increases, unlike Musk’s previous 2018 award.

The new proposal follows a Delaware judge’s ruling that Musk’s earlier US$56 billion pay deal should be voided, though the final decision from the Delaware Supreme Court is still pending.

If the Delaware Supreme Court upholds the judge’s ruling, the new package will be canceled, as Musk cannot receive both awards.

Tesla’s board formed a special committee to develop the plan, and Musk and his brother Kimbal recused themselves from the process.

Tesla has announced plans to move its incorporation from Delaware to Texas, but the process may not be complete.

🔗 Source: TechCrunch

🧠 Food for thought

1️⃣ Musk’s compensation reflects broader CEO pay explosion that has far outpaced worker wages

Tesla’s $29 billion package for Musk continues a decades-long trend of executive compensation growing dramatically faster than typical worker pay.

CEO compensation rose approximately 1,000% between 1978 and 2017, while the ratio of CEO pay to median employee pay increased from 15 to 1 in 1965 to 221 to 1 in 20171.

Even before this new package, Musk’s previous $44.9 billion compensation was already 275 times greater than the median S&P 500 CEO pay of $16.3 million2.

This puts Tesla’s justification in broader context. While they cite competitive pressures, Musk’s compensation exists within an executive pay environment that has grown exponentially compared to worker wages over decades.

The median employee wages have remained largely stagnant at around $77,000, while average CEO pay across all industries reached $7.4 million in 20181.