Despite the fact that the average US chief executive's pay package last year was nearly 200 times more than a mid-level employee's salary, Elon Musk's record-breaking Tesla compensation package overshadows them all.
On Thursday, Tesla shareholders voted overwhelmingly to reinstate Musk's 10-year pay plan, which was valued at $44.9billion by the company in April. The value was higher earlier in the year, but Tesla's stock has since dropped by about 25%.
The all-stock package, approved by the board and shareholders in 2018, rewards Musk for achieving milestones such as increasing Tesla's market value, pretax income, and revenue. However, a Delaware judge dismissed it in January, stating that the approval process was "deeply flawed."
The court ruled that Musk controlled the company's board and that shareholders were not fully informed. Nevertheless, the company argued that Musk deserves the pay because he transformed Tesla into the world's leading electric vehicle manufacturer, thereby increasing its market value by billions.
Even with the reapproval vote, Musk won't immediately gain access to the stock options. Tesla is expected to request the judge to reconsider her decision in light of the vote, and if she doesn't, the company will likely appeal the ruling to Delaware's Supreme Court.
This entire process could take several months. Regardless of the outcome, Musk's package - the largest ever awarded to a CEO of a US public company - far exceeds what other chief executives have been granted. Here's how the package compares:.
The median pay package for a CEO in the S&P 500 in the US last year was $16.3million, according to data analysed by Equilar. If you multiply that by 10 to get $163million for a decade of work, Musk's earnings would still be 275 times greater. In her January ruling that struck down the package, Delaware Chancellor Kathaleen St. Jude McCormick wrote that Musk's package, then worth about $56billion, was 250 times larger than the median peer CEO's pay plan.
The top earner in the survey was Hock Tan, CEO of artificial intelligence company Broadcom Inc. His package, mostly consisting of stock awards, was valued at about $162million, when given to Tan at the start of fiscal 2023.
Thanks to a surging stock price, Broadcom in March valued Tan's pay package, plus older options he hadn't yet cashed in, at $767.7 million. That's an amount easily eclipsed by Musk's potential haul of 304 million shares worth almost $45billion.
Other CEOs at the top of THE survey are William Lansing of Fair Isaac Corp, ($66.3million); Tim Cook of Apple Inc. ($63.2million); Hamid Moghadam of Prologis Inc. ($50.9million); and Ted Sarandos, co-CEO of Netflix ($49.8million).
Technically, Musk got no compensation last year because he didn't get any stock options. But he stands to get even richer if his pay package goes through. Calculating Elon Musk's annual pay for last year is a tricky task. According to Tesla, he received no salary.
However, if his compensation package survives legal scrutiny, his earnings could skyrocket into the billions. As per Tesla's proxy filing this year, the median annual pay of a non-CEO Tesla employee in 2022 was $45,811.