Elon Musk, the CEO of Tesla, was set to receive a $46 billion pay package over ten years. However, a Delaware judge overturned the package after a shareholder sued to invalidate it, deeming it “unfathomable.” The company is now seeking reaffirmation of investor support for the award ahead of an upcoming annual general meeting on June 13th.
The controversy surrounding Musk’s compensation highlights the growing scrutiny of executive pay practices in the business world. This massive pay package for Musk is nearly 300 times greater than the salary of America’s highest-paid CEO, Hock Tan of chipmaker Broadcom. Additionally, the package is equivalent to 8% of Tesla’s current market value, which has decreased by roughly 20% over the past year.
The shareholder who sued to invalidate Musk’s pay package argued that it was excessive and not aligned with the company’s long-term success. The judge agreed, ruling that the package was unenforceable due to its lack of reasonableness.
Tesla is now appealing the decision and seeking to have Musk’s pay package reinstated. However, the controversy surrounding executive compensation continues to grow as investors become increasingly concerned about the impact that large pay packages can have on a company’s long-term success.
