Elon Musk’s compensation plan, estimated to be worth over $50 billion if all performance milestones are met, has been a contentious topic among investors and corporate governance experts. The plan, which ties Musk’s compensation predominantly to Tesla’s stock performance and specific operational goals, was approved by a majority of shareholders in 2018. However, an increasing number of stakeholders have voiced concerns about the sheer scale of the package and Musk’s ability to meet the aggressive targets.
One particular shareholder, who asked to remain anonymous, criticized the package this week. “Elon Musk is undoubtedly a visionary and has transformed multiple industries,” the shareholder said. “But his attention is divided among different ambitious projects like SpaceX and Neuralink. He needs to focus on these other goals, including going to Mars, rather than being rewarded so extravagantly for his work at Tesla.”
The call for Musk to prioritize his Mars mission comes in light of SpaceX’s consistent advancements towards making human life multi-planetary. SpaceX successfully launched numerous rockets in 2020 and made significant progress with its Starship prototype — a spacecraft designed for long-duration interplanetary travel.
Critics argue that while Musk’s influence is crucial for Tesla’s continued success, the time he invests in SpaceX and other ventures may come at the cost of his commitment to Tesla shareholders. Furthermore, they argue that such an unprecedented pay package sets a worrying trend for executive compensation overall.
This criticism isn’t entirely new; last year saw another legal challenge initiated by Richard Tornetta, a small Tesla investor who filed a lawsuit against Musk’s pay deal claiming it was excessive and breached fiduciary duties. The case is still ongoing in Delaware’s Court of Chancery.
Supporters of Musk argue that his unorthodox leadership style and broad range of interests are part of what makes him such a pivotal force in technology and innovation. They claim that tying his financial incentives so closely to Tesla’s performance ensures he remains aligned with shareholders’ interests while simultaneously allowing him the freedom to pursue groundbreaking projects.
Nevertheless, this recent dissent adds fuel to an ongoing debate about executive pay and corporate governance as Tesla continues its meteoric rise within the automotive industry and beyond. As public scrutiny intensifies, it remains uncertain whether further pressure from shareholders will prompt changes to Elon Musk’s controversial pay package or his diverse array of pivotal ventures.
