Tesla is once again proposing a staggering pay deal for its CEO Elon Musk, potentially awarding him $56 billion (£44.9 billion), in what could be the largest pay package in corporate American history.
The electric vehicle (EV) giant is seeking approval from shareholders to reinstate the record-breaking compensation plan initially set in 2018.
This move follows a US judge’s rejection of the deal in January, who criticised it as an “unfathomable sum”.
This proposal comes on the heels of Musk’s recent announcement of plans to reduce Tesla’s global workforce by over 10%. In a memo to staff, Musk expressed his reluctance towards layoffs but deemed them necessary.
Under the 2018 compensation plan, Musk would receive no salary or bonus but would be rewarded based on Tesla’s market value surging to potentially $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 against the pay deal, deeming it unfair to shareholders. She suggested that Tesla directors, captivated by Musk’s charisma, may not have adequately informed shareholders.
Tesla’s filing on Monday seeks shareholders’ approval for both the pay package and a relocation of its headquarters from Delaware to Texas, a move threatened by Musk in response to the court ruling.
In a letter included in the regulatory filing, Tesla’s board chair Robyn Denholm defended Musk’s compensation, noting that he had not received pay from Tesla for six years. Denholm disagreed with the court’s ruling, asserting that it did not align with corporate law.
Musk’s compensation for 2023 was reported to be $0, as he does not draw a salary from Tesla but is compensated through stock options. Tesla has proposed subjecting the original 2018 pay package to a new shareholder vote, while planning to appeal the court ruling.
The re-vote on Musk’s pay deal coincides with a challenging period for Tesla, marked by dwindling EV deliveries and ongoing concerns about safety recalls. Musk himself has faced personal challenges, including controversies over his social media activity and Tesla’s product safety.
Despite these hurdles, Musk remains one of the world’s wealthiest individuals, with estimates of his net worth ranging from $198 billion to $220 billion as of November 2023, according to Bloomberg and Forbes.
Ozioma Samuel-Ugwuezi
Follow us on:
