Elon Musk, the CEO of Tesla, shakes up Silicon Valley and Wall Street with his controversial pay package. If successful, it would garner enough profits to cement him as the world’s first trillionaire. Musk today is worth $493 billion and is in fact the richest person on earth, according to Forbes magazine. He is just as intent on achieving a new highest amount of history, though.
Boris Tseytlin Tesla board of directors recently proposed a $1 trillion pay package. This bonus is contingent on Musk hitting aggressive performance targets. These successes range from raising Tesla’s stock price by 80%, doubling the number of vehicles sold and tripling operating earnings. In order for Musk to ever reach this compensation, he must produce 20 million Teslas in the next ten years. He unlike getting to produce one million robots–that’s a big leap from the zero robots he’s producing today.
As you might expect, the proposal received strong support as well as significant dissenting testimony. AGAINST SEVERAL pension funds, including Calpers and Norway’s sovereign wealth fund, vigorously oppose the pay package. They have spoken out against it and raised a lot of alarm bells about it. They’re deeply concerned about the precedent set by implementation of such a huge, unprecedented compensation scheme. This worry is compounded by the growing global wealth concentration.
The Vatican has also weighed in on the discussion, with Pope Leo XIV stating:
“If that is the only thing that has value anymore, then we’re in big trouble.”
Musk’s brother is one of the board members who helped craft this very controversial pay for performance structure. This deeply rooted familial connection raises serious questions about conflicts of interest. Proponents confidently assert that visionary leader Musk’s gravitational force is imperative for Tesla’s continued growth.
Things that make people supporters like Ron Baron worship Musk’s unblinking ambition and perfectionist expectations. Baron testified that Musk’s unconventional talents are nothing less than Tesla’s lifeblood—as in, necessary to the company’s ongoing success and innovation. Conversely, critics caution that Musk often operates on the edge of risk, with Nancy Tengler remarking that he “frequently teeters on the edge of disaster.”
As with all things Elon Musk and SpaceX, the excitement over the plans is tempered by intense pressure. These performance targets that the board develops are not just aspirational, they are crucial to obtaining significant monetary bonuses. The extra $50 billion in Tesla shares is tied to Musk achieving certain milestones. This leads to some pretty fundamental questions about whether all of these aspirational targets are practical or fair.
Against the backdrop of today’s depressed economy, millions are facing deepening economic insecurity and worsening inequality. Musk’s pay package makes clear the shocking reality of wealth concentration. Critics warn that making one person so rich could further deepen divides in society. This famous aura of fatalism deeply echoes the sentiments of numerous commentators who assume that lavish pay deals ought to be congruent with wider economic circumstances.
In addition to the rising tensions surrounding Musk’s massive compensation plan, Musk has recently been in the news for his aggressive approach to critics. Musk has claimed he will leave Tesla if he can’t get what he thinks deserves. His patronizing remarks toward critics have set off a firestorm of anger. He referred to some of them as “corporate terrorists,” revealing his utter contempt for anyone who dares challenge his sweeping plans.
The discussion surrounding Musk’s pay package encapsulates a broader conversation about corporate governance and executive compensation in today’s economy. Stakeholders, from the smallest retail investor to the biggest global pension fund, are looking to weigh in on this important topic. So this issue is obviously not going to be fixed overnight.
