Judge rules Elon Musk $56 billion pay package too much

Elon Musk Tesla pay package legal ruling reveals a rotten system for rewarding executives

A judge in the state of Delaware has ruled that the $56 billion pay package awarded to Elon Musk by Tesla in 2018 should be annulled. The case had been brought to the court by a Tesla shareholder who claimed argued that this was an unjustifiable overpayment.

The 200 page legal opinion published on the Elon Musk pay award offers an unprecedented, independent and objective insight into the top pay setting process at a major corporation.

The court had access to ‘compensation committee’ minutes and evidence from key figures under oath. They found that committee members had long-standing ties to Musk, tied billion pound bonus payouts to targets that the company stood to hit anyway, and showed no interest in whether or not such huge payouts were really necessary to incentivise someone who already possessed billionaire status and a substantial shareholding in the company.

These ‘compensation committees’ (typically called remuneration committees, in the UK) set payouts for the executives, bankers, lawyers and other ‘one percenter-ers’ whose vast incomes have created such an extraordinary gap between the super-rich and everybody else. The Musk case opens the bonnet on how they operate – with wealthy committee members drawn from the same narrow strata of society as the executives they pass judgement on -who themselves benefit or have benefitted from the culture of excess top pay – accepting completely uncritically the myth of the superstar CEO. The result is that society endures painful levels of inequality that are bereft of any economic or moral logic.

High Pay Centre Executive Director Luke Hildyard was invited onto BBC World News to discuss the story. The full interview is available to watch above.