Elon Musk Rejected: Rp 16,400 Jumbo Compensation
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A group of Tesla shareholders, including the SOC Investment Group and state officials from Nevada, New Mexico, and Connecticut, are urging fellow investors to reject Elon Musk’s proposed $1 trillion (approximately Rp 16,400 trillion, based on an exchange rate of Rp 16,400 per USD) compensation package. The request was formally submitted on Thursday, October 3, 2024.
The coalition argues the package is excessive and not aligned with shareholder value. The plan, originally approved in 2018, grants Musk options to purchase a important number of Tesla shares if the company meets a series of ambitious financial and operational goals.
The Compensation Package Details
The 2018 compensation plan hinges on Tesla achieving specific milestones related to market capitalization, revenue, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). If these targets are met,Musk stands to gain a substantial number of Tesla shares.
According to a Tesla 10-K filing with the Securities and Exchange Commission, the package was designed to incentivize Musk to focus on long-term growth and innovation.
| Milestone | Target |
|---|---|
| Market Capitalization | $100 Billion |
| Revenue | $120 billion |
| Adjusted EBITDA | $10.5 billion |
Musk’s Response
Elon Musk swiftly responded to the rejection letter via posts on his X (formerly Twitter) account. He asserted that the incentive package was specifically structured to align his compensation with the value created for Tesla shareholders.
If Elon Musk does not reach the target, he will not accept anything,
Musk wrote on X, emphasizing that his reward is contingent upon achieving the pre-defined goals.
Legal Challenges and Delaware Ruling
This challenge follows a January 2024 ruling by the Delaware Court of Chancery, which invalidated Musk’s 2018 compensation package, citing conflicts of interest and a lack of proper shareholder approval. The court found that the board members who approved the package were not sufficiently independent from Musk.
Musk is currently appealing the Delaware ruling. The outcome of the appeal will considerably impact the future of his compensation and potentially his role at Tesla. The appeal is scheduled to be heard in early 2025.