Elon Musk and Tesla’s board once again make the case for largest corporate payday in history

As Tesla shareholders prepare to vote on whether to grant CEO Elon Musk a pay package valued at nearly $1 trillion, the billionaire argued that this proposal isn’t actually about the money at all—but rather about maintaining control over the electric vehicle maker.

In an Oct. 22 earnings call, Musk and Tesla’s CFO, Vaibhav Taneja, said they didn’t want to refer to the proposed pay package as “compensation” at all. Instead, Musk said he was concerned with “how much voting control I have in Tesla,” particularly given the company’s goal of building an “enormous robot army.”

The package Musk referenced would award him additional shares if he meets certain Tesla benchmarks over the span of a decade, including delivering 1 million robots, and having 1 million robotaxis in commercial operation. Should he meet the milestones Tesla’s board has set, Musk could gain a 25% stake in the company, and in turn increase his voting power.

In recent years, Musk has sought to pivot Tesla away from selling electric vehicles in favor of self-driving cars and a humanoid robot the company calls Optimus. On the call, the CEO claimed he wouldn’t spend the money if he received the proposed award, but said he wanted “a strong influence over that robot army” if he built it. “That’s what it comes down to in a nutshell. Like I don’t feel comfortable building that robot army if I don’t have at least a strong influence,” he added.

(It should be noted that Musk has had a strong influence in both the public and private sector, with mixed results. After he bought the social media app Twitter, changed its name to X, and discarded the site’s content moderation rules, the platform’s value dropped by an estimated 80%).

Tesla board urges shareholders to approve Musk’s unusual pay package. If granted, this compensation plan would be the largest corporate pay package in history—but its sheer size isn’t the only thing that makes it unusual.

The committee that put together this proposal also bucked traditional executive compensation norms when designing it, HR Brew previously reported. They decided against proposing Musk’s pay based on what CEOs earn at similar peer group companies, arguing such benchmarking would be “irrelevant” given the types of goals that Tesla’s CEO has been given.

This isn’t the first time Tesla’s board has tried to award Musk an unusually large compensation package. When shareholders decide whether or not to grant Musk this super-sized payday on Nov. 5, they’ll also be asked to vote on partially restoring Musk’s previous pay package, valued at $56 billion, that was ultimately invalidated by a Delaware court.

While shareholders initially approved that previous pay package, Judge Kathaleen McCormick invalidated it on grounds that investors weren’t given adequate information about the proposal, and certain Tesla board members involved in the negotiations weren’t independent. Tesla is currently appealing that decision.

The debate over Musk’s pay comes at a time when the gap between what CEOs earn compared to rank-and-file workers continues to invite scrutiny; Starbucks and United Healthcare are among the companies that have recently been criticized for awarding their CEOs pay packages that are much larger than what their median workers earn.

But beyond setting a new standard for CEO pay, the Nov. 5 shareholder vote could also have broader implications for corporate governance practices, a professor and student from Case Western Reserve School of Law recently argued in a commentary piece published in Bloomberg Law. The Delaware Supreme Court’s decision in the case involving Musk’s previous 2018 package, they added, “will further determine whether Tesla’s governance approach becomes a framework for other founder-led companies or a cautionary tale about the limits of executive control and the importance of board independence.”