Elon Musk's Controversial $56 Billion Pay Package Debate

Elon Musk's astronomical $56 billion pay package faces opposition from shareholders concerned about corporate governance and its impact on workers.

### The Controversy Surrounding Elon Musk's $56 Billion Pay Package
* 💰 Elon Musk's proposed **$56 billion compensation package** has sparked significant debate, particularly as it is **$55.7 billion more** than the pay of Google's CEO.
* 📉 A group of Tesla shareholders, led by New York City Comptroller Brad Lander, is urging others to reject this **unprecedented pay package** due to Musk's questionable leadership amidst a **40% stock decline** and **massive layoffs**.
* 🚨 Since the start of the year, Tesla has faced severe challenges, including the **dismissal of over 14,000 employees** and the abandonment of major projects like the **affordable Model 2**.
* 🧐 Critics argue that Musk's focus has shifted away from electric vehicles to other ventures, potentially **alienating Tesla's core customer base** and **hurting the company's reputation**.
* 📊 If the pay package is approved, it could **dilute Tesla shares by nearly 9%**, significantly impacting shareholders, including **working-class individuals reliant on pension funds**.
* ⚖ The controversial pay package was originally approved in 2018 but faced legal challenges due to claims of **lack of independence** within Tesla's board, which includes Musk's **family and friends**.
* 🗳 As Tesla's annual shareholder meeting approaches on June 13th, major investors like CalPERS and advisory firms such as Glass Lewis are also planning to vote against Musk's pay proposal, highlighting the **growing concern over corporate governance**.
* 🚨 If unchecked, this situation could prioritize the interests of **wealthy CEOs over those of everyday workers**, potentially undermining the principles of **corporate governance** and **harming the economy**.

Does Elon Musk, the world's richest man,
deserve $56 billion? The largest compensation package
in history? $55.7 billion more than Google's CEO. (Clip)
In recent years,
"billionaire" has become a pejorative.

Like, it's a pejorative. It's like, "that's a bad thing." That's the question that's rocking
the financial world right now. (Clip)
A group of Tesla shareholders are trying
to encourage others to vote against

CEO Elon Musk's $56 billion pay package. This is a great American story. Rolling the dice, there's a great chance he gets nothing. But if he performs, he gets a huge payout and we should applaud that. $55 billion is such a large pay package
that it basically skewed

dramatically upward the entire data set for the compensation
consulting industry. I can't think of one other example where a company not just would give,
you know, a $56 billion pay package, but to a guy who was like a one-third time
CEO and whose distractions

are threatening to pull the company in bad
directions. That's New York City Comptroller Brad Lander. He's leading the fight,
along with other major shareholders, to reject Musk's astronomical pay package
at the automaker's annual shareholder

meeting June 13th. I mean, the pay package, to say
it's stratospheric doesn't really represent a good understanding of like,
I don't know, the Earth's atmosphere. It's just off the charts. But why is the city comptroller
talking about a CEO's business decisions?

Doesn't Elon know what he's doing if he's the richest man in the world? And why does he have to listen
to a bunch of pesky shareholders who have never run
a multibillion-dollar business? Well, let's take a look at how he's
been running Tesla in the last few years.

Since the start of this year, Tesla's
stock has fallen more than 40%. Sales are plummeting. Layoffs are rampant. In April, the company sent home over 14,000
employees, or 10% of its global workforce.

The really cool-looking
Cybertruck has been marred by recalls and the highly anticipated and affordable
Model 2 was scrapped by Musk. And now it seems like he's not even sticking to the brand's mission
of making electric vehicles.

Instead, he's pouring his focus
in between epic tweets, or X's, pardon me, into launching an OpenAI competitor
and robo taxis, which are supposedly dropping on
August 8th. The market with EVs is just beginning.

A little long-term
research in the robo taxis and whatever else he's got in
his imagination is fine. That's long-term R&D, but when that eats
the whole attention of the company, that's not good. Maybe he's not so interested in EVs
as his alliance with Trump grows.

(Donald Trump)
Now they want to go to an EV. Everybody has to have an electric car. Isn't that wonderful? They don't go far. By the way, that ends on the first day. Maybe he's distracting shareholders by presenting new shiny ideas
that will save them all.

Whatever the case, it's all hurt Tesla's reputation. Elon Musk is alienating
the core customer base of Tesla. And maybe that's why he's trying
to imagine Tesla as a different business. But that just doesn't make sense.

Like, what the board of Tesla should say
is, okay, either you can be the CEO of Tesla,
put your focus and energy here, stop with the distractions
that are driving our buyers away, grow the company, or we should get somebody else
who will do that.

I mean, the guy is literally
the CEO of three companies. How can any one of those be thriving? Very rarely
is a CEO running three companies and also seemingly spending
most of his time on Twitter ranting. But that is what Elon Musk is doing.

I mean he’s the CEO of Tesla, he’s the CEO of SpaceX, he’s the CEO of X, and clearly he spends a lot of time on X ranting
politically. Lander is also leading the opposition
on that egregious pay package

because, as the NYC Comptroller, he manages
retirement funds, and your retirement is actually what is funding Musk's
record compensation package. The New York City pension funds own
quite a lot of Tesla stock. You know, over $600
million in Tesla stock

we own. If Musk is handed
$56 billion by Tesla's board, it's estimated that everyone's
Tesla shares will dilute by nearly 9%. To put that in perspective, other
big companies usually see their shares value decrease by only 1% when new shares
are doled out as part of pay packages.

And it's not just the suits smoking
fat cigars who will feel this. It's working
people like you. There are titans of industry
and very wealthy people who own a lot of stock,
but a whole lot of stock is owned

by working people through their pension
fund. This dilution wouldn't just squeeze people like teachers, firefighters, school
crossing guards and nurses. It would also increase Musk's control
over the company, boosting his ownership stake from 12.9% to 22.4%.

And how we got here in
the first place is just as head-scratching as Musk's
giant pay package for part-time work. See this $56 billion number you keep
hearing was decided on back in 2018. Back around the time
“A Star Is Born” hit theaters, Tesla's

Board of Directors were birthing
something of their own. The biggest pay package
in the history of the corporate world. The board approved a massive $56
billion payout for their CEO, Elon Musk. But a few shareholders
thought it was excessive

and that the board
wasn't acting independently. So some shareholders sued and a Delaware judge agreed with them
and rescinded the pay package. I've never seen anything quite like it
where the court says, a judge says, we looked at what's required
for a board to act independently

and they didn't do it. Now, lots of boards
are way too close to their CEO. That's not uncommon. But still, it is uncommon for it
to be so blatant a violation of independent shareholder governance
that the court would rule against it.

The Delaware judge rejected the pay package because it was developed by Musk himself, rather than an independent compensation committee. He was just like, “Uh, yeah, $56 billion would be cool.” Company shareholders were not properly informed about that when they were asked to vote.

Which is no surprise considering some of Tesla's board members are actually family members and, if you can believe it, even friends of Musk. Kimbal Musk is Elon's brother. When I say a family-owned company, this is a family-owned company.

And James Murdoch, son of Rupert, but also, like, best buds with Elon Musk. So this is like a bro board of literal family and chums, and, like, they could go for, like an AI fishing weekend or whatever.

But the board is supposed to be independent board members and James Murdoch and Kimbal Musk ain’t that. So, with friends and family on the board of Tesla, they're pushing forward with the pay package anyway, despite what that Delaware judge ruled.

Tesla's shareholders meeting is poised for June 13th, and they'll be voting on a few things here. Tesla's proposal to move the corporation from Delaware to Texas so they can dodge the Delaware court. The reelection of two board members, Kimbal Musk and James Murdoch.

And, of course, Elon's enormous pay package. Luckily, Brad Lander isn't the only shareholder voting no on these fronts. It is kind of a polarized world, and there's no doubt he has his defenders.

but most people who take the point of view of what's good for broad corporate governance know this stinks. In addition to proxy advisor Glass Lewis urging shareholders to vote no, CalPERS, who is among the top 30 investors of Tesla, is also planning

to vote against the pay package proposal. The team is evaluating it. But as of today, minus the conversation that has yet to happen with Tesla, we would not be voting in favor of that proposal. ISS, one of the biggest advisory firms, has also joined the opposition.

If Musk's pay package goes through, along with Tesla's move to Texas and the reelection of two controversial board members, it could fundamentally undermine the integrity of corporate governance. Allowing this to continue unchecked prioritizes the interests of powerful CEOs

and their close associates over those of middle class workers and the general public, ultimately hurting the economy and setting a dangerous precedent for CEO pay. But if things get broken in the way that this case suggests, there really is a risk the whole thing could kind of erode

and the provisions that make it possible for investors to invest in companies that will grow in ways that pay good returns for pensioners and create good jobs for workers and respect their freedom of association and build a middle out, flourishing U.S. economy

gets eroded by wanton billionaires, and there's risk that that's what will happen more and more if he's allowed to win here.

Elon Musk Secures Record Shattering $56 Billion Pay Package

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More Perfect Union

Controversy surrounding Elon Musk's $56 billion compensation package

Questioning the justification for the largest compensation package in history, exceeding Google's CEO's pay by $55.7 billion.

Tesla shareholders are voting against the package.

The size of the package dramatically skewed compensation data for the consulting industry.

Concerns raised about Musk's part-time CEO role and distracting activities threatening the company.

NYC Comptroller Brad Lander leads the opposition to the package.

Tesla's recent performance and Musk's actions

Tesla's stock has fallen over 40%, sales are plummeting, and layoffs are widespread.

Cybertruck recalls, cancellation of Model 2, and shift of focus away from EVs.

Musk's focus on OpenAI competitor and robo taxis instead of EVs.

Concerns about Musk's priorities and potential alliance with Trump affecting EV focus.

Musk's actions are hurting Tesla's reputation and alienating customers.

Analysis of Musk's leadership and the implications of his compensation

Suggestion for Musk to focus on Tesla or be replaced as CEO.

Concerns about Musk's ability to effectively lead three companies while spending time on Twitter.

Lander's opposition due to management of retirement funds impacted by the package.

NYC pension funds' significant Tesla stock ownership and potential dilution.

Estimated 9% share dilution compared to usual 1% in other companies.

The legal history of the compensation package

The $56 billion package was decided in 2018.

Shareholders sued, and a Delaware judge rescinded the package due to lack of board independence.

The judge found the board didn't act independently.

The court ruled against the package due to blatant violation of shareholder governance.

The package was developed by Musk himself, shareholders weren't properly informed, and board members were family and friends.

Upcoming shareholder meeting and potential outcomes

Shareholders will vote on moving Tesla to Texas, reelection of board members (Kimbal Musk and James Murdoch), and Elon Musk's pay package.

Many shareholders, including Glass Lewis and CalPERS, are voting against the proposals.

Approval of the proposals could undermine corporate governance.

Potential negative economic impact and setting a dangerous precedent for CEO pay.