- In today’s CEO Daily: Diane Brady on Elon Musk’s Tesla pay package.
- The big story: U.S. to reduce flights as shutdown lingers.
- The markets: Mixed, with U.S. futures trending up.
- Plus: All the news and watercooler chat from Fortune.
Good morning. Pope Leo XIV doesn’t like Elon Musk’s trillion-dollar pay package at Tesla. Nor does Norway’s sovereign wealth fund, which owns just over 1% of Tesla shares and plans to vote against the proposal that will be decided today. Still, odds are high that the world’s richest man will get his way as shareholders are rightly worried that he will walk if he doesn’t. His board has said as much, as has Musk. Put aside the questions about whether CEOs are paid too much or it’s tone-deaf to insist on a record-breaking pay package when so many fellow citizens are struggling. Leaders might instead ponder other questions arising from this battle:
How resilient is this company? When it comes to running Tesla, the board appears to believe that there can be only one person in charge. As Tesla chair Robyn Denholm argued in her note to shareholders: “Elon singularly possesses the leadership characteristics and technical manufacturing know-how” to take Tesla to the next level. But being perceived as indispensable is a double-edged sword for any leader—and board. While it may underscore a leader’s star power, it also suggests that the loss of that leader could mean the loss of the company, too.
How resilient is this CEO? He started the year as the defiant, chainsaw-wielding man from DOGE, whose “polarizing and partisan actions” may have cost Tesla more than 1 million U.S. EV sales, according to a Yale study. Now, he tells us he’s not “comfortable building a robot army here and then being ousted.” So he’s willing to walk away from everything he’s built if he doesn’t get everything he wants?
Is this how a public company should work? Many a founder has come to the public markets with a give-me-your-money-and-shut-up ethos. But shareholders long ago decided that with great capital comes great responsibility. Gone are the days when you can treat your company as your personal ATM, issue missives to a clubby board, and act like the people funding this venture should have no say or clarity over how you’re spending their money. Delaware courts have struck down Musk’s pay packages in the past. Musk calls the proxy advisory firms “corporate terrorists” for recommending shareholders vote down the pay package.
Why not? This is ‘moonshot pay’ that will materialize if Musk meets audacious, seemingly impossible goals. He gets rich. We get rich. So what if it’s dilutive to existing shareholders? Or that shareholders are paying big after Tesla’s had a ho-hum year and Chinese EV sales are on a tear? Perhaps the best way to test out that “Musk Magic” premium is to give Elon Musk everything he wants.
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Contact CEO Daily via Diane Brady at diane.brady@fortune.com
