Other CEOs are being fired for far less, but the board of embattled EV giant Tesla will pay CEO Elon Musk $44.8 billion ($US29 billion) to stay with the company as it fights to recover after Musk’s political antics crippled its sales and destroyed its hard-won brand cachet.
The payment – which is 29 per cent more than the revenues of Tesla’s entire business during its latest quarter – is being called an “interim payment” and “first step” as Tesla fights a court to pay Musk a $86 billion (US$55.8 billion) performance bonus laid out in 2018.
That payment was struck down on appeal in December, after Tesla put the original proposal to two shareholder votes and argued, unsuccessfully, for the court to approve what would be, as the judge put it, “the largest executive compensation award in the history of markets.”
Under Musk’s leadership, by the end of June 2022 Tesla had met the 12 milestones set out in 2018 as conditions for the CEO Performance Award – but Tesla was sued by shareholders who instigated a “knock-down, drag-out lawsuit” that continues to this day.
“We can all agree that Elon has delivered the transformative and unprecedented growth that was required to earn all milestones of the 2018 CEO Performance Award,” board of directors Special Committee members Robyn Denholm and Kathleen Wilson-Thompson wrote on X.
“Tesla is at a critical inflection point that has the potential to create continued extraordinary value,” they wrote, crediting Musk’s “unique vision and leadership” in guiding it from EV and renewables “to grow towards becoming a leader in AI, robotics, and related services.”
“It is imperative to retain and motivate our extraordinary talent, beginning with Elon,” they continued, noting that “the war for AI talent is intensifying” amidst major AI acquisitions and “nine-figure cash compensation packages for non-founder, individual AI engineers.”
Musk has overseen destruction of value at Tesla…
Musk’s eye-watering compensation comes amidst a dramatic shift in AI market value, with recent massive pay offers likened to those of professional athletes – such as the “genius” Perth AI researcher who turned down a $1.54 billion offer from Meta head Mark Zuckerberg.
Ironically, the tech they’re being paid so much to develop threatens to eliminate jobs for normal workers – extending Musk’s work “breaking” IT systems and firing tens of thousands of career public servants at his short-lived Department of Government Efficiency (DOGE).
Enthusiasts and protestors have descended on LA's new Tesla Diner, but it's Elon Musk that is truly eating Tesla's profits. Photo: Tesla
Backlash against Musk’s antics – which ramped up as he pumped $385 million ($US250 million) into the campaign to re-elect Donald Trump – saw deliveries of its flagship Model 3 and Y slashed from 471,930 units in Q4 last year to just 323,800 units in Q1 this year.
That saw revenues plummet by $9 billion ($US5.8 billion) quarter to quarter, with Musk labelled a “toxic figurehead” by activist filmmaker Alex Winter as protestors continue protesting his involvement with Tesla through efforts such as the ongoing ‘Tesla Takedown’.
Continued anaemic Tesla sales – the company recently warned that Q2 figures wouldn’t be much better – have spelled problems for the company, which sees its future in ‘robotaxis’ and electric trucks even as its sales and brand strength falter in Australia and elsewhere.
…but conventional expectations of CEOs aren’t being applied to him
Successful CEOs, a recent McKinsey survey found, must set the company direction, engage the board, connect with stakeholders, manage personal effectiveness, mobilise through leaders, and align the organisation – and those that fail are generally pushed out quickly.
Last year saw more than 2,000 CEO resignations and this year is breaking records, with 222 US CEOs quitting in January alone – up 14 per cent year-on-year– and lesser CEOs fired for branding misfires, loss of board confidence, corruption, incompetence, and infidelity.
In March, loss-making Tesla rival, electric car maker Lucid Group, pushed out CEO Peter Rawlinson, who was the auto industry’s highest paid CEO on a salary of around $585 million ($US379 million).
Yet despite a chorus of investors and employees calling for Musk to step down, Tesla’s board continues to back him as the company’s best chance to steer it into a future it believes will be shaped by robotaxis, electric trucks, and armies of humanoid robots.
Despite Musk’s time and attention being diluted by his roles at xAI, SpaceX, Neuralink, X Corp and the Boring Company, Musk is “a magnet for hiring and retaining talent at Tesla,” they said, and “we are confident that this award will incentivise Elon to remain at Tesla.”
“Even among this group of highly talented individuals, no one matches Elon’s remarkable combination of leadership experience, technical expertise, and… track record of building the most revolutionary and profitable businesses across different industries.
“Retaining Elon is more important than ever before.”
