Musk’s $55-B Pay Won’t Satisfy His Greed: Robert Reich

Elon Musk has threatened that he would not grow Tesla to become a leader in artificial intelligence (AI) and robotics without a compensation package that gave him ownership of around 25% of the company’s stock, double the roughly 13% he currently owns, argued Robert Reich in his Substack piece.

Musk claims that his demand isn’t about money but about control. I Photo: Elon Musk X

He claims that his demand isn’t about money but about control. “At 15% or lower, the for/against ratio to override me makes a takeover by dubious interests too easy,” he crowed.

“Rubbish. He could easily maintain control if Tesla established a two-class voting system giving him multiple votes for each share. (Mark Zuckerberg holds 61% of the voting power at Meta despite Vanguard, BlackRock, and Fidelity owning more Meta stock than he does.) Following the logic of the Delaware court’s ruling, Musk’s attempt to hold Tesla hostage for a bigger compensation package would also violate his fiduciary duty to Tesla and its other shareholders,” Reich stressed.

While the Delaware courts are setting limits on executive pay, Democrats in Congress are seeking to do the same through a sliding-scale corporate tax.

Last week, senators Bernie Sanders, Elizabeth Warren, Ed Markey, and Chris Van Hollen proposed a corporate tax that rose with the ratio between CEO pay and median worker pay.

Their Tax Excessive CEO Pay Act of 2024 would raise the corporate tax rate by one-half of 1% on firms whose CEOs (or their highest-paid employee if not the CEO) made between 50 and 100 times the pay of their median worker.

The tax would rise incrementally up to corporations whose CEOs make 500 times what their median worker makes.

“To give you some perspective on this, in the 1960s, that ratio was roughly 20-to-1. Now, it’s more than 300-to-1. I applaud the legislation but suggest it be amended to raise the sliding-scale corporate tax rate above a 500-to-1 ratio. In 2021, when Musk sold a batch of Tesla stock options, his ‘total realized compensation’ was $734,762,107. That made the ratio of Musk’s compensation to the median compensation of all Tesla employees that year, 18,043-to-1,” Reich pointed out.

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