Executive bonuses are supposed to reward good behaviour, and incentivise more of it. The near-$30bn in stock that Tesla just awarded to boss Elon Musk doesn’t quite fit that pattern. Instead, it looks like throwing goodies at a wayward leader in the hope that he will change his ways.
Tesla directors on Monday said Musk — the world’s richest man — will get a grant of 96mn shares in two years, conditional upon him staying at the company for five. Musk currently owns over 400mn shares, 13 per cent of the whole company, worth around $125bn. But he has admitted that without more to motivate him, his attention could drift to other parts of his sprawling empire.
The new bonus is a workaround of sorts. A $56bn bonus awarded to Musk in 2018 was blocked by a Delaware court, which found it excessive and deemed it the creation of a compromised board of directors. The new slug of shares, granted under the terms of a 2019 executive pay plan, will only become effective if an appeal to the Delaware Supreme Court to reinstate that larger award fails.