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Leaders say it\u2019s lonely at the top. But is it all that bad if you have billions of dollars and a hefty tranche\u00a0of shares in your company?\u00a0<\/p>\n
Next Thursday, Tesla<\/a> shareholders will vote on Elon Musk\u2019s proposed $56 billion pay package\u2014the highest-ever executive compensation package in history. In January, a judge rescinded his compensation<\/a> over governance concerns, and so the Tesla board has asked shareholders to ratify it a second time.\u00a0<\/p>\n If Musk\u2019s pay package doesn\u2019t get approved, there\u2019s a chance he may step away from the EV mammoth. Indeed, Robyn Denholm, the chairman of the board at Tesla, wrote in a letter to shareholders<\/a> that Musk could spend his time working at \u201cother places\u201d if his pay package isn\u2019t approved. Musk currently holds leadership roles in at least five other companies including SpaceX<\/a>, X<\/a>, xAI, Neuralink, and The Boring Company.<\/p>\n \u201cOne thing Elon most certainly does not have is unlimited time,\u201d Denholm wrote. \u201cNor does he face any shortage of ideas and other places he can make an incredible difference in the world. We want those ideas, that energy and that time to be at Tesla, for the benefit of you, our owners. But that requires reciprocal respect.\u201d<\/p>\n Reciprocal respect, in this case, is a pay package that dwarfs all pay packages at all other Fortune 500 companies. For example, the highest-paid executive in the U.S. this year was Hock E. Tan, the CEO of Broadcom<\/a>. His total compensation was about $161.8 million, according to Equilar<\/a>\u2019s list of the 100 Highest-Paid CEOs in 2023<\/a>. Other top-earners include Nikesh Arora, CEO of Palo Alto Networks<\/a> who brought home $151.4 million and Sue Y. Nabi, CEO of beauty company Coty<\/a>, who made $149.4 million last year.\u00a0<\/p>\n Even Tim Cook, CEO of Apple<\/a>, made $63 million in 2023, and Microsoft<\/a> CEO Satya Nadella earned $48.5 million. That\u2019s not even 1% of Musk\u2019s proposed pay.\u00a0<\/p>\n \u201cElon Musk\u2019s pay package is actually the largest disclosed for a public company CEO ever,\u201d Courtney Yu, director of research at executive intelligence firm Equilar, tells Fortune<\/em>. \u201cIf the vote passes, then not only will Elon Musk be the wealthiest person again, but he\u2019ll be closer to owning 25% of Tesla, which he\u2019s openly stated as wanting.\u201d<\/p>\n Even still, Denholm insists it\u2019s not about the billions of dollars for Musk\u2014but rather delivering on the promised package the company agreed to back in 2018.\u00a0<\/p>\n For Musk, it\u2019s \u201cnot about the money, Denholm said. \u201cWe all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018.\u201d\u00a0<\/p>\n While Tesla shares make up the majority of Musk\u2019s net worth, his stake in SpaceX is worth $71.2 billion, his stake in X (formerly Twitter) is worth $8.4 billion, and his Boring Company stake is worth $3.3 billion, according to a February 2024 analysis<\/a> from The Washington Post.<\/em><\/p>\n While Musk\u2019s pay package is essentially incomparable to all other executive compensation packages, it\u2019s not as if top CEOs are hurting for cash. Indeed, median CEO pay hit $16.3 million in 2023, which is nearly 200 times the salary of a typical worker, according to data<\/a> analyzed for The Associated Press by Equilar released this week.\u00a0<\/p>\n CEO pay was up nearly 13% year-over-year in 2023, which is a significant increase from the year prior in which executive compensation jumped less than one percentage point. Equilar credits a strong economy in 2023 for the jump in executive pay, as \u201cCEO pay is often influenced by market conditions.\u201d<\/p>\n The increase in stock awards has also helped the spike, Yu says.\u00a0<\/p>\n \u201cOverall, CEO compensation has steadily increased over the years, largely driven by equity-based awards,\u201d Yu says. \u201cIn recent years, these equity awards have been more and more tied to hitting performance metrics, such as how Elon Musk\u2019s options were tied to market- and financially-based goals.\u201d<\/p>\n Musk and Tesla have been campaigning diligently to get his pay package passed. The company has hired strategic advisers<\/a>, bought advertisements<\/a>, and launched a website<\/a> encouraging shareholders to vote in favor of his historic compensation package.\u00a0<\/p>\nWhat\u2019s happened to CEO pay over the years<\/h2>\n
What\u2019s at stake<\/h2>\n