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Chief executive officers

Tesla's $30 Billion Bonus for Elon Musk Sparks Debate Over CEO Pay

Strategic Insights

— 2 min read

Tesla's board has awarded a grant of 96 million shares to CEO Elon Musk, worth approximately $30 billion, in a bid to keep him at the company. This move comes after a 2018 bonus package worth $56 billion was blocked by a Delaware court, deeming it excessive. The new award is conditional on Musk staying at Tesla for five years and is part of a longer-term compensation strategy.

Key Takeaways:

  • The $30 billion bonus for Elon Musk is the largest in the company's history, with the executive set to receive 96 million shares in two years.
  • The award is conditional on Musk staying at Tesla for five years, with the goal of keeping him engaged with the company's performance.
  • The new bonus is a workaround for the 2018 $56 billion bonus that was blocked by a Delaware court, which deemed it excessive.
  • The 2018 bonus plan was approved by shareholders, but the associated accounting charge was just $2.3 billion at the time, which was expected to increase as the company's market capitalization grew.
  • Tesla's market capitalization has added almost $800 billion since the 2018 plan was implemented, with shareholders repeatedly approving the bonus package despite it heavily diluting their own shareholdings.
  • The company is struggling, with the stock price falling a third from its December peak and earnings down by a fifth year on year.
  • Elon Musk's attention remains divided, with him overseeing multiple businesses, and shareholders and the board have let him get his way in most respects, highlighting the weakness of their leverage.

Statistics:

  • $30 billion: The value of the new bonus award to Elon Musk.
  • 96 million: The number of shares Musk will receive in two years.
  • 13%: Elon Musk's current ownership stake in Tesla, worth around $125 billion.
  • $125 billion: The value of Musk's current share stake in Tesla.
  • $2.3 billion: The associated accounting charge at the time of the 2018 bonus plan.
  • $56 billion: The value of the blocked 2018 bonus award to Elon Musk.
  • $800 billion: The increase in Tesla's market capitalization since the 2018 plan was implemented.
  • $30 billion: The value of the new bonus award to Elon Musk, equivalent to the near-$30bn figure mentioned in the article.
  • December 2022: The time period from which Tesla's stock price has fallen by a third.

Sources:

  • Tesla directors (no date mentioned in the source material).
  • "Executive pay plan" of 2019.
  • "Tesla's $30 Billion Bonus for Elon Musk Sparks Debate Over CEO Pay" (no publication date mentioned).
  • "Delaware court" (no date mentioned in the source material).
  • "Delaware Supreme Court" (no date mentioned in the source material).
  • "Tesla" (no date mentioned in the source material).
  • "Shareholders" (no date mentioned in the source material).
  • "Elon Musk" (no date mentioned in the source material).

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