If you’ve reached the mid-20s, you’ve probably noticed that the world isn’t quite a fair place. Of course, hard work can lead to success, but there’s a serious prevailing issue of of income inequality. Consider an employee in the same company struggling with their monthly salary, while a high-level executive might earn in a year what the worker might not see in a lifetime. While of course equal salaries aren’t expected, It is not possible to ignore injustice. You don’t believe me? Recently, a court had to decide that Elon Musk’s $56 billion stock option package from Tesla’s board was excessive and needed cancellation. Here are the details…
Judge Rules Against Elon Musk’s $56 Billion Tesla Pay
The salaries and annual bonuses of tech CEOs have often been a topic of discussion. For example, in 2022, Tim Cook earned $99.4 million at Apple, with $3 million as his salary, $83 million from stock bonuses, and a $16.5 million bonus. Now, Elon Musk was set to receive a much much more impressive amount from Tesla, exactly six times larger than the combined pay of the top 200 executives.
Over the past decade, Elon Musk, Tesla’s founder and CEO, has achieved remarkable success. Tesla has not only become synonymous with electric vehicles but has also seen a substantial rise in its market value. In recognition of Musk’s contributions, Tesla’s board awarded him a $56 billion stock option package. To give you an idea of the scale, this amount surpasses the reserves of more than 100 central banks globally as of 2024.
That’s such a significant payment that even your own company needs court approval to grant it to you. However, a Delaware court judge deemed the $56 billion stock option package awarded to Elon Musk by Tesla’s board excessive and ruled that it should be canceled. The court cited concerns that the $56 billion payment rewarded the CEO without considering shareholders’ interests and highlighted that the board didn’t act independently enough in determining Musk’s compensation during the decision making process.
Tesla’s board of directors must craft a new compensation package and may prompt a review of the connection between Tesla shareholders and the CEO. Musk, in response, strongly advocated against incorporating the company in Delaware, stating, “Never incorporate your company in the state of Delaware,” implying the potential relocation of Tesla to another state.
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