Tesla’s board of directors proposed an unusual compensation plan for the company’s CEO Elon Musk. The plan payouts were entirely contingent on achieving very ambitious market value, sales, and EBIT targets over the next ten years. If all the targets were achieved, Tesla would be one of the most valuable companies in the world, and Musk would receive the highest compensation of any CEO in U.S. corporate history. If the targets were not achieved, Musk would receive nothing. Proxy advisors (ISS and Glass Lewis) expressed serious reservations about the plan and urged shareholders to vote against it. Should shareholders approve or reject the plan?
Keywords: CEO compensation; compensation committee; Corporate Governance; Executive Compensation; Governing and Advisory Boards; Business and Shareholder Relations; Auto Industry; United States;
Citation:
Palepu, Krishna G., and Sarah Mehta. "Tesla's CEO Compensation Plan." Harvard Business School Case 118-085, April 2018. (Revised January 2020.) View Details
