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Tesla Stock Is Rising. Elon Musk Speaks Out on $1 Trillion Pay Package.
Barrons· 2025-09-24 11:38
Core Insights - Investors are closely monitoring CEO Elon Musk's compensation as a significant factor influencing Tesla stock performance [1] Group 1 - The focus on Musk's compensation reflects broader investor concerns regarding executive pay and its alignment with company performance [1]
CEO Comps are Broken
CEO Compensation Strategy - Companies often benchmark CEO compensation against peers, aiming for a specific percentile, such as the 75th percentile [1] - For example, a CEO at the 75th percentile might receive $20 million annually [2] - The report suggests that traditional peer-based compensation may not be effective for CEOs with substantial personal net worth [2][3] - The report advocates for aligning CEO compensation with their net worth rather than solely relying on peer comparisons [3] - The report highlights the use of Performance Share Units (PSUs) as a compensation tool [3] Alternative Compensation Models - The report suggests that for individuals with significant net worth, compensation should be creatively structured [2] - The report uses Elon Musk as an example, suggesting that a standard CEO salary of $29 million would be insignificant to someone of his wealth [3]