Let’s dive into the details of Elon Musk's $46 billion compensation package from Tesla, the debate surrounding it, and why it's more about motivation than money.

Elon Musk’s Eye-Watering Payday

Elon Musk’s astronomical $46 billion Tesla payday has been the subject of much debate. But according to Tesla’s board chair, Robyn Denholm, this gargantuan sum isn’t just about lining Musk’s already deep pockets. No, this payday is more about keeping the enigmatic CEO laser-focused on the future of Tesla and its ambitious goals.

“When we made our commitment to Elon in 2018 — a commitment that was overwhelmingly approved by approximately 73% of disinterested stockholders — it had one simple purpose: to keep Elon focused on Tesla and motivated to achieve the Company’s incomparable ambitions,” Denholm wrote.

The Genesis of the $46 Billion Package

Back in 2018, Tesla decided to put a hefty carrot in front of Musk to ensure he stayed committed to steering the electric vehicle giant towards uncharted territories. The deal? A chance to purchase up to 304 million shares at a mere $23.34 each, provided Musk hit a series of ambitious milestones. Fast forward to 2022, and Musk had successfully ticked off enough of these milestones to cash in on the entire package. However, a Delaware judge tossed out the package earlier this year, leaving Musk with zero compensation from Tesla for his recent efforts. According to Denholm, this isn’t just unfair – it strips Musk of the motivation to keep driving Tesla forward. Hmmmm… she might have a point.

“Obviously not about the money”

In her letter to shareholders, Denholm passionately defended the decision to re-ratify Musk’s 2018 compensation package. She emphasized that the decision was overwhelmingly backed by shareholders back then and insisted that fairness and respect were at the core of this move. “This is obviously not about the money,” Denholm stated, highlighting Musk’s towering net worth of $208.2 billion, making him the world’s second richest person. “Motivating someone like Elon requires something different.”

Critics and Supporters Clash

Of course, not everyone is on board with this colossal pay package. Critics range from government funds in California and New York City to proxy advisors like Glass Lewis and Institutional Shareholder Services. New York City Comptroller Brad Lander, whose funds hold a significant number of Tesla shares, argued that while Musk’s past role has been vital, there needs to be independent governance to ensure pay packages are reasonable. Lander stated, “This pay package is not reasonable.”

On the flip side, Musk’s allies have come out swinging in support of the compensation deal. Billionaire Ron Baron and his investment management firm, Baron Capital, are vocal proponents. Baron, a long-time Tesla bull, described Musk as the ultimate “key man” and credited him for Tesla’s extraordinary success. Baron recounted how Musk even slept on the factory floor during Tesla’s tough times, demonstrating his relentless drive.

Musk’s Wealth: More Than Just Tesla

A significant chunk of Musk’s wealth stems from his Tesla stock, but let’s not forget his other ventures, like SpaceX, his new artificial intelligence (AI ) startup xAI, and Neuralink. During a recent interview with CNBC, Denholm remarked that the world benefits from Musk’s ecosystem, ensuring that his myriad ventures don’t unfairly affect Tesla shareholders. Recently, Musk faced heat for allegedly diverting AI chips from Nvidia, meant for Tesla, to his other ventures. While he denied the claims, it added fuel to the fire of those questioning his compensation.

Rallying the Troops

In the run-up to Tesla’s annual meeting on June 13, the company has launched a full-on campaign to drum up support for re-ratifying Musk’s pay package. This includes advertisements and a dedicated website pushing the board’s recommendations. Musk himself has taken to X (formerly Twitter) to rally the vote, while Denholm is working the phones with institutional investors.

The Verdict: Fair or Foul?

As the debate rages on, we do have to admit that Musk’s $46 billion payday is more than just a compensation issue. It’s a referendum on how to motivate one of the world’s most influential and unconventional CEOs. While some see it as an essential move to keep Musk’s eyes on the prize, others view it as an extravagant and unjustifiable reward. Regardless, one thing’s for sure – when it comes to Elon Musk and Tesla, the stakes are always sky-high.

That said, $46 billion is a big chunk of cheese and there are very few in the world who wouldn’t find it a motivating factor.

For more finance adjacent stories, and perhaps advice on how to renegotiate your pay packet, visit our Trending section.