How Tesla Pay Package of Elon Musk, Valued at $44.9 Billion, Compares with Most Generous Plans of Other U.S. Executives

Despite the fact that the average CEO pay in the U.S. last year was nearly 200 times higher than that of a median worker at their company, Elon Musk’s record compensation at Tesla overshadows them by comparison.

Tesla shareholders overwhelmingly voted on Thursday to reinstate Musk’s 10-year pay plan, valued at $44.9 billion, which the company assessed in April. Earlier this year, they were worth more, but since then Tesla’s stock price has fallen by about 25%.

The stock package, approved by the board of directors and shareholders in 2018, rewards Musk for achieving targets such as increasing Tesla’s market value, revenue, and pre-tax earnings.

In January, it was rejected by a Delaware judge who said the approval process was “deeply flawed.” The court ruled that Musk controlled the company’s board of directors and shareholders were not fully informed.

However, the company argued that Musk deserves the compensation because he turned Tesla into the world’s top-selling electric vehicle maker, increasing its market value by billions.

Even after the re-vote, Musk will not immediately access the stock options. Tesla is expected to ask the judge to reconsider her decision in light of the voting results, and if she does not, the company will likely appeal to the Delaware Supreme Court. The entire process could take months.

Regardless of the outcome, Musk’s package is the largest reward for a CEO of a U.S. public company, far exceeding what other executives received. Here’s a comparison of the package:

WITH AVERAGE CEO PAY

According to data analyzed by The Associated Press from Equilar, the average CEO pay of a U.S. company in the S&P 500 index last year was $16.3 million. Multiplying this by 10 for a decade’s work yields $163 million, still 275 times less than Musk’s potential earnings.

In her January ruling to cancel the package, Delaware Chancellor Kathleen Saint-Germain McCormick wrote that Musk’s package, then valued at around $56 billion, was 250 times larger than the average CEO pay plan of a comparable CEO.

WITH INDIVIDUAL CEOs

The highest earner in the AP survey was Hock Tan, CEO of Broadcom Inc., an AI company. His mostly stock-based package was valued at approximately $162 million when it was awarded to Tan at the start of the 2023 fiscal year. In March, Broadcom valued Tan’s compensation, including earlier unexercised options, at $767.7 million. This amount easily eclipses Musk’s potential acquisition of 304 million shares valued at nearly $45 billion.

Other CEOs topping the AP survey include William Lansing from Fair Isaac Corp ($66.3 million); Tim Cook from Apple Inc. ($63.2 million); Hamid Moghadam from Prologis Inc. ($50.9 million); and Ted Sarandos, co-CEO of Netflix ($49.8 million).

Technically, Musk did not receive any compensation last year as he did not receive any stock options. But he could become even wealthier if his compensation package is approved.

WITH TESLA EMPLOYEES

It’s difficult to estimate Musk’s annual salary last year. The company says he received nothing. But if his compensation package goes to court, his salary will amount to billions. According to the company’s proxy statement this year, the average annual salary of a non-CEO Tesla employee last year was $45,811.