Elon Musk Defends Massive Pay Package Against Former Employee's Criticism

Elon Musk has publicly responded to a former Tesla employee who questioned the structure and value of his proposed pay package. The employee argued on X that the package is an overpayment and would not generate sufficient shareholder value, suggesting other CEOs could achieve similar growth at a lower cost.

Key Takeaways

• Elon Musk defended his substantial pay package against a former employee's criticism.

• The former employee argued the package is an overpayment and would underperform the S&P 500.

• Musk countered by highlighting Tesla's market dominance and questioning who else could lead the company.

• Tesla's board has previously addressed concerns about Musk's political involvement.

• A previous pay package was twice approved by shareholders but blocked by a lawsuit.

The Contentious Pay Package

The upcoming Tesla Shareholder Meeting in November will prominently feature discussions around CEO Elon Musk's proposed pay package. This package has the potential to grant Musk an additional $1 trillion in holdings if he meets all outlined performance milestones. While the majority of the community appears supportive, a segment of institutional and individual shareholders have voiced opposition.

Institutional Shareholder Services' Stance

Institutional Shareholder Services (ISS) has advised voting against the pay package, citing "extraordinarily high pay opportunities over the next ten years." ISS also noted that the package could "reduce the board’s ability to meaningfully adjust future pay levels" and described its value as "astronomical."

Former Employee's Critique

A former Tesla employee took to X to express their concerns, stating that the proposed pay package would "barely beat inflation and it would underperform the S&P 500 considerably." The employee further elaborated, "some of us (and supposedly, ISS too) simply don’t think that underperforming the S&P 500 this much is worth paying somebody 20 billion dollars worth of company value." They added that while they love Tesla and want it to succeed, they believe the company would be overpaying its CEO and that other competent leaders could achieve similar results with less cost and drama.

Musk's Blunt Response

Musk responded directly to the former employee's critique on X, stating, "Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla? It won’t be me."

Addressing Political Involvement Concerns

Concerns about Musk's potential involvement in politics have been a recurring theme. Tesla's Board has previously addressed this in its proxy filing, stating a commitment to "receive assurances that Musk’s involvement with the political sphere would wind down in a timely manner."

Precedent and Future Implications

This is not the first time Musk's pay package has faced scrutiny. A previous package was approved by shareholders twice but was ultimately blocked by a lawsuit from a shareholder in the Delaware Chancery Court. Musk's recent response suggests that if this package also faces significant legal challenges, he may step down as CEO in the coming years.