Name: Elon Musk's record $56bn pay deal rejected for second time | BBC News
Uploaded: 2024-12-04T02:55:52.000Z
Duration: 5 min 39 s
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But we're going to start with news that Elon Musk has had his Tesla pay blocked by a judge.

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According to a decision in a Delaware court, the Tesla chief executive's record-breaking $56 billion pay award will not be reinstated.

That comes after months of legal wrangling, and despite the pay award being approved by shareholders and directors in the summer, Judge Kathleen McCormick has argued that Tesla's board members were too heavily influenced by Mr Musk.

In response, he himself said shareholders should control the company, votes not judges.

For more on this, here's our technology correspondent, Lily Jamali.

This was awarded a couple of years ago and was contingent on Elon Musk, the head of Tesla, meeting certain targets having to do with sales and revenue and the like.

Those billions of dollars were in stock options, so today they're actually worth quite a bit more than $56 billion, closer to about $100 billion.

And this ruling today from Chancellor Kathleen McCormick really reiterates her ruling from back at the start of the year in January, where she found that this pay package is excessive and that not only that, that the board of directors at Tesla is not sufficiently independent to approve it, that the people on the board have personal and business relationships with Musk.

Just to give you an example, his brother Kimball happens to be on the board.

James Murdoch, the son of Rupert Murdoch, is also on this board.

And so in June, Musk and Tesla put this to the shareholders who approved this pay package.

But Chancellor McCormick saying that simply isn't enough, reiterating that early decision.

And one of the arguments we saw here from the shareholders was that they weren't told how easy or hard it would be for Musk to meet those original targets when they voted.

Now let's speak to the leadership expert, Chris Roebuck, who's from University College London School of Management.

And I want to come on to whether anyone is worth $56 billion in just a second.

But first of all, let's talk about the logistics of him being awarded this.

He says he's earned, he's delivered the results at Tesla.

Well, there is a wider point here about how he's done this.

There are questions around honesty, integrity, transparency.

And if you take the wider point, if you make the judgment that Musk is not demonstrating those, how can he expect his employees to demonstrate those and make Tesla work?

Because if you look at how this is rolled out, as your reporter previously said, the judge has found that the board was excessively influenced by Musk.

There's other details that suggest that the shareholders weren't made fully aware of quite how easy it was for Musk to get this.

So you could say that this is a sleight of hand.

So yes, technically, he has deserved the award.

But the fact that shareholders were perhaps, to some degree, had over in terms of how easy it was to get means that there are questions about it.  So what is a better way of governing a company like that?

What power should shareholders have and what sort of checks and balances should be in place to make sure that maybe someone like Mr. Musk doesn't have too much influence over those who are deciding this sort of stuff?

Well, Ben, this is one of the big questions about executive pay that we've been talking about perhaps for the last 20 years.

The fact that somebody has to decide what a CEO does and what he gets for doing that.

And that should be the board, a remuneration committee, and then the shareholders.

But as you and I have discussed in the past, we have seen numerous cases where what has happened is that CEOs have pressurized remuneration committees and non-executive directors to get their way, and then they've pushed it through shareholders.

If you have a strong CEO who can exert pressure and influence such that even independent directors are under pressure.

And we've seen cases where independent directors who have resisted CEO pressure have somehow been made to leave the organization.

So there is a system that should have checks and balances.

The problem is that with certain CEOs, they think they can make up their own rules and not abide by the rules that everybody else in the organization has to.

And let's come on to that question then, who is worth $56 billion?

I mean, you can't even get your head around a number like that.

And you know, yes, a hugely successful business.

But this speaks to a wider issue, doesn't it, of the disparity between those at the Oh, yeah, without a doubt.

If you look at all the stats around the differential between workers' pay and senior leadership pay, in general terms, over the last 20, 25 years, the gap has got bigger and bigger and  And in some financials, for example, the senior leadership are earning four or 500 times what the average employee is earning.

And it is a problem that we keep saying we need to address from the perspective of integrity, society, fairness, but we don't seem to be doing it terribly well.