Tesla CEO Elon Musk waves as he leaves the Tesla Gigafactory for electric cars in Gruenheide near Berlin, Germany on March 13, 2024. Tesla shareholders are charting the future of the electric vehicle company on Thursday, June 13, 2024. (AP Photo/ Ebrahim Noroozi, the Canadian Press).
Elon Musk's compensation from Tesla starkly outshines that of other CEOs, even as CEO pay in the U.S. continues to grow. Last year, the median pay for a U.S. CEO was nearly 200 times that of an average worker in their company. However, Musk's pay dwarfs this comparison.
On Thursday, Tesla shareholders voted decisively to reinstate Musk's 10-year pay plan, valued at $44.9 billion by the company in April. The plan was worth more earlier in the year, but Tesla's stock has since dropped about 25%.
This all-stock package, initially approved in 2018 by Tesla’s board and shareholders, rewards Musk for achieving specific milestones, including boosting Tesla's market value, pretax income, and revenue. However, a Delaware judge ruled the approval process was "deeply flawed," citing Musk’s influence over the board and insufficient information provided to shareholders.
Despite this, Tesla maintains that Musk deserves the compensation for transforming the company into the world’s top electric vehicle maker, significantly increasing its market value. Following the reapproval vote, Tesla is expected to ask the judge to reconsider her decision. If she doesn’t, the company plans to appeal to Delaware's Supreme Court, which could take months to resolve.
Regardless of the final outcome, Musk's pay package remains the largest ever awarded to a CEO of a U.S. public company. In comparison, the median pay package for a CEO of an S&P 500 company last year was $16.3 million. Over a decade, this totals $163 million, still far below Musk's potential earnings, which are 275 times greater.
In January, Delaware Chancellor Kathaleen St. Jude McCormick noted that Musk's pay package, then valued at $56 billion, was 250 times larger than the median pay for his peers.
Among other CEOs, Hock Tan of Broadcom Inc. was the highest earner in a survey by the Associated Press, with a compensation package valued at $162 million at the start of fiscal 2023. With Broadcom's rising stock price, Tan’s pay, including older options, reached $767.7 million in March. Still, this is dwarfed by Musk’s potential earnings of 304 million shares worth nearly $45 billion.
Other high earners in a media survey include William Lansing of Fair Isaac Corp ($66.3 million), Tim Cook of Apple Inc. ($63.2 million), Hamid Moghadam of Prologis Inc. ($50.9 million), and Ted Sarandos of Netflix ($49.8 million).
Technically, Musk received no compensation last year as he didn’t acquire any stock options. However, if his pay package is approved, he stands to earn billions. In contrast, the median annual pay for a non-CEO Tesla employee last year was $45,811.
