A recent court ruling had Elon Musk advising his 170 million X/Twitter followers to never incorporate a company in Delaware (relatable).
Driving the news: Tesla CEO Elon Musk will not cash in on a US$55.8 billion pay package that had been agreed to by the company’s board back in 2018, after a Delaware judge ruled that Musk “dominated” the pay negotiation process to secure “unfathomable” compensation.
- Musk would’ve received 303 million Tesla shares as part of the compensation package, which would’ve boosted his ownership stake from 13% to ~25%.
- The compensation plan was about 250 times larger than the average package for CEOs, and was found to have been secured using Musk’s sway with the Tesla board.
Why it matters: CEOs are bringing in huge compensation packages that are sometimes hundreds of times greater than their employees' salaries. Some experts say these compensation gaps lead to poorer employee morale, lower productivity, and higher turnover.
- In Canada, the 100 best-paid CEOs make 246 times more than average workers. To put that into perspective, they earn an average annual salary almost every day.
- Just last year, shareholders voted to reject massive pay packages for the CEOs at LiveNation and Netflix, prompting serious reforms to the execs’ payment structures.
Bottom line: CEOs are still going to make a lot of money, but investors are likely to continue putting pressure on head honchos to tie their compensation to some realistic metrics.—LA