Leaders say it’s lonely at the top. But is it all that bad if you have billions of dollars and a hefty tranche of shares in your company?
Next Thursday, Tesla shareholders will vote on Elon Musk’s proposed $56 billion pay package—the highest-ever executive compensation package in history. In January, a judge rescinded his compensation over governance concerns, and so the Tesla board has asked shareholders to ratify it a second time.
If Musk’s pay package doesn’t get approved, there’s a chance he may step away from the EV mammoth. Indeed, Robyn Denholm, Tesla board chair, wrote in a letter to shareholders that Musk could spend his time working at “other places” if his pay package isn’t approved. Musk currently holds leadership roles in at least five other companies including SpaceX, X, xAI, Neuralink, and the Boring Co.
“One thing Elon most certainly does not have is unlimited time,” Denholm wrote. “Nor does he face any shortage of ideas and other places [where] he can make an incredible difference in the world. We want those ideas, that energy, and that time to be at Tesla, for the benefit of you, our owners. But that requires reciprocal respect.”
Reciprocal respect, in this case, is a pay package that dwarfs all pay packages at all other Fortune 500 companies. For example, the highest-paid executive in the U.S. this year was Hock E. Tan, CEO of Broadcom. His total compensation was about $161.8 million, according to executive intelligence firm Equilar’s list of the 100 Highest-Paid CEOs in 2023. Other top earners include Nikesh Arora, CEO of Palo Alto Networks, who brought home $151.4 million, and Sue Y. Nabi, CEO of beauty company Coty, who made $149.4 million last year.
Even Tim Cook, CEO of Apple, made just $63 million in 2023, and Microsoft CEO Satya Nadella earned $48.5 million. That’s not even 1% of Musk’s proposed pay.
“Elon Musk’s pay package is actually the largest disclosed for a public company CEO ever,” Courtney Yu, director of research at Equilar, tells Fortune. “If the vote passes, then not only will Elon Musk be the wealthiest person again, but he’ll be closer to owning 25% of Tesla, which he’s openly stated as wanting.”
Still, Denholm insists it’s not about the billions of dollars for Musk—but rather delivering on the promised package the company agreed to back in 2018.
For Musk, it’s “not about the money, Denholm said. “We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018.”
While Tesla shares make up the majority of Musk’s net worth, his stake in SpaceX is worth $71.2 billion, his stake in X (formerly Twitter) is worth $8.4 billion, and his Boring Co. stake is worth $3.3 billion, according to a February 2024 analysis by the Washington Post.
What’s happened to CEO pay over the years
While Musk’s pay package is essentially incomparable to all other executive compensation packages, it’s not as if top CEOs are hurting for cash. Indeed, median CEO pay hit $16.3 million in 2023, which is nearly 200 times the salary of a typical worker, according to data analyzed for the Associated Press by Equilar released this week.
CEO pay was up nearly 13% year over year in 2023, which is a significant increase from the year prior in which executive compensation jumped less than one percentage point. Equilar credits a strong economy in 2023 for the jump in executive pay, as “CEO pay is often influenced by market conditions.”
The increase in stock awards has also fueled the spike, Yu says.
“Overall, CEO compensation has steadily increased over the years, largely driven by equity-based awards,” Yu says. “In recent years, these equity awards have been more and more tied to hitting performance metrics, such as how Elon Musk’s options were tied to market and financially based goals.”
What’s at stake
Musk and Tesla have been campaigning diligently to get his pay package passed. The company has hired strategic advisors, bought advertisements, and launched a website encouraging shareholders to vote in favor of his historic compensation package.
But others who oppose Musk have also organized. Several investors in late May released a letter urging other shareholders to vote “no,” arguing the proposal is excessive—especially considering that Tesla’s company performance is quite turbulent at the moment.
“Even as Tesla’s performance is floundering, the board has yet to ensure that Tesla has a full-time CEO who is adequately focused on the long-term sustainable success of our company,” the shareholder group wrote in the letter.
If the vote doesn’t pass, then Tesla could try its hand at putting together another pay package for Musk, “though it’ll be hard to match the previous pay package,” Yu says.
But the biggest thing at stake for Tesla is losing Musk altogether—although some argue that he barely puts in any work at the company anymore.
“Elon is not a typical executive, and Tesla is not a typical company,” Denholm said. “So the typical way in which companies compensate key executives is not going to drive results for Tesla. Motivating someone like Elon requires something different.”
