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1 month ago
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When it comes to a pay deal so large that it could soon make him equivalent to one of the world’s largest global economies, Elon Musk is encountering some pushback. This week, the Tesla boss became the first person in history to reach a net worth of $500bn (£370bn) – and, with a future payday, he could well become the first trillionaire – equivalent to 1,000 billion dollars.
It would make him richer than Belgium.
A group including SOC Investment Group, which seeks to hold companies and bosses accountable for unethical behaviour and excessive pay, pension funds, unions and several US state officials, have penned a letter urging investors to vote against the bloated package at the company's November meeting. They also want shareholders to oppose the re-election of three of the directors who approved the plan.
“The Board’s relentless pursuit of retaining its CEO seems to have harmed the company’s reputation, led to extraordinarily high levels of executive compensation, and delayed progress on meeting key goals like full self-driving,” it says.
I suspect that this is just the first shot in what will turn into a protracted battle, perhaps involving the courts – which have already been involved in previous Musk pay packages.
With the prospect of creating the world’s first trillionaire CEO, Tesla seems alive to the fact that it could have a PR problem on its hands. Its X feed has started to feature posts urging investors to follow “the board’s recommendations on ALL proposals” – Tesla’s emphasis, not mine.
The “ALL” is because I suspect that at least some Tesla shareholders will feel more inclined to vote against the package than the board members. Non-executive directors are paid to oversee the management on behalf of shareholders. Is there anyone out there willing to argue that Tesla’s are doing that cogently? Nonetheless, it is really quite rare for directors to suffer substantial votes against their election. Dissent over the pay packages they construct is more common.
Tesla’s tactics seem manipulative. Take its post featuring “Kiyoko”, a telegenic and engaging Tesla employee of 12 years standing. We see her smiling on the factory floor, and interviewed in a comfy chair eulogising about the company while explaining how she used her “hard-earned Tesla stock” to buy a new house.
The idea the post is trying to convey is that it isn’t just Elon who benefits from share awards. The little people get some, too. There’s some golden crumbs at the table for them!
Good for Kiyoko. I just hope she survives the next cost-cutting drive, when Tesla bosses will likely ignore the cost of having a celebrity CEO.
The letter rightly highlights the problem with this company, namely that its board appears to believe that Tesla is Elon and Elon is Tesla. Kiyoko doesn’t matter. Nor do her fellow workers; the engineers, the whizz-kids, even the other bosses. Business is a team sport but Tesla wants us to believe that it is a one-man show. Its devotion to Musk is now almost cult-like.
Where has that devotion got Tesla? Volatile sales, at least in Europe, and a rollercoaster of a share price. The stock has headed north after Musk dipped into his bulging pocket to purchase a $1bn batch of shares, which the markets took as a sign of the CEO’s confidence in Tesla’s prospects.
The company also announced a record number of vehicle deliveries in the third quarter of 2025. However, that was in part due to the expiry of a tax credit in the US and purchasers hurrying to get in ahead of it. How sales will go in its absence remains to be seen. I’d gently suggest that holders of the stock strap in.
The board’s main argument for Musk’s award is that Tesla will have to hit “stretching” targets (an oft-used word when it comes to CEO packages) to get the full whack, paid in shares. Meeting them will indeed represent quite the feat. Musk will have to oversee the sale of 1m AI robots, 12m Tesla cars, and boost the company’s market value by a factor of eight.
If he turns every $1 invested in $8, what have shareholders got to worry about? It is this: they are being asked to give their company – and it is their company – away.
It isn’t enough that Musk already has a substantial stake, which will also have increased by a factor of eight, should he pull this off. The Tesla boss has repeatedly groused about his lack of control over Tesla and the board has leaned into that. This package would increase his 16 per cent stake to 25.
All for a part-time job. Musk is currently juggling more plates than are stored in the kitchens of New York’s biggest hotel. In addition to running Tesla, there’s SpaceX and his other businesses. He owns X, and has embarked on a second career as a political activist and social media influencer on the platform.
His latest foray into the culture wars is a call for a boycott of Netflix over its content. The question that I haven’t seen asked amid the inevitably hot tempered debate that has followed is this: how is it that Elon Musk has a Netflix subscription? How on earth does he find the time to make use of it? The man has angry tweets to compose…
The wider issue with this absurdity is, of course, the effect it will have on other CEO packages. They will inevitably be knocking on the doors of their boards to demand something similar. And they aren’t all superstars. Far from it.
It is time for shareholders to get real: this is not in their interests whichever way you look at it. It is certainly not in Tesla’s corporate interests given it will have a life after Musk.
It is time for them to join with the letter’s signatories and vote no. Whether enough of them will do that to cause trouble is an open question. This wouldn’t be the first crazy package they’ve backed.
