If it is a coincidence, it is an era-defining one that the president of the United States is in competition with the world’s richest person for the title of most shameless public figure. Tesla shareholders agreed this month to award the company’s chief executive, Elon Musk, an absurd $1 trillion pay package. Tesla has all the trappings of a big public corporation, but laws, corporate procedures and governance structures seem to have more often enabled rather than checked Mr. Musk, who appears to relish transcending the limits of reason and seemliness.
So far, this approach has worked for him, to put it mildly.
It is hard to imagine that Mr. Musk really desires, let alone deserves, such a gargantuan payday. His estimated fortune is well over $450 billion, and his more than 900 million Tesla shares account for about $400 billion of that total. His wealth is already tied to the performance of Tesla’s stock. He has plenty of financial incentive to run Tesla well and for a good long time. You’d think he wouldn’t need any more reasons to stay at the company.
Robyn Denholm, the chairman of Tesla’s board of directors, nevertheless warned shareholders, “If we fail to foster an environment that motivates Elon to achieve great things through an equitable pay-for-performance plan, we run the risk that he gives up his executive position, and Tesla may lose his time, talent and vision.”
So Tesla shareholders made history by awarding Mr. Musk an extraordinary new pay plan. To Mr. Musk, the package’s most handsome rewards might be nonpecuniary: his singular status as potentially the first (and only) trillion-dollar chief executive — and perhaps the satisfaction that no one has been able to curb his whims.
Ms. Denholm and a large majority of Tesla shareholders showed that they believe Mr. Musk is indispensable to maintaining Tesla’s prosperity, as he promises to turn the company into something resembling an artificial intelligence juggernaut, replete with humanoid robots and cars that require minimal human involvement.
The payment plan is designed to resemble something that appears fair, throwing up hurdles for Mr. Musk to clear. It won’t kick into high gear unless and until Tesla achieves a market capitalization of at least $2 trillion, around 50 percent higher than the company’s current stock-market value. Mr. Musk would not hit the ultimate jackpot unless Tesla’s market capitalization reaches $8.5 trillion, at which point all the shares in his new pay package become available to him. He would also have to meet some operational goals, including developing a framework for finding a successor, getting self-driving cars and robo-taxis on the road and beginning to roll out those robots to consumers and companies.
However tall, these hurdles help Mr. Musk further the illusion that his pay plan is “equitable,” as Ms. Denham put it. Even if he fails to clear them all, he could still make many billions by achieving some of them — and get the satisfaction of watching his shareholders kneel before him.
Mr. Musk celebrated his new pay package at a Tesla factory in Texas. He took the stage, pumping his fists in the air, and danced to techno-synth music alongside some of his humanoid Optimus robots. He claimed, without irony, that the robots could “eliminate poverty” and perform surgery better than surgeons. He made wild predictions about how much the economy would grow. “With A.I. and robotics, you can actually increase the global economy by a factor of 10 or 100,” he said. “There’s not, like, an obvious limit.” He wasn’t done hyping. “It’s going to be the biggest product of all time by far,” he said. “Optimus is kind of like an infinite money glitch,” he added. “I guess what I’m saying is: Hang on to your Tesla stock.”
Tesla’s corporate board, the company’s shareholders and proxy advisory firms have all either bought the hype or determined they cannot oppose him. A Delaware judge struck down Mr. Musk’s bloated 2018 compensation plan, only for shareholders to re-approve it last year. (The Delaware Supreme Court will ultimately decide an appeal in the case, which was argued last month.) His new, even larger pay package is a flex in the face of dissenting shareholders, skeptical judges and appalled observers.
This should all sound familiar. Remember when President Trump took a personal gift of a $400 million jumbo jet from a foreign government? Or how he tore down the East Wing of the White House to build a $300 million ballroom? Would you believe that instead of a picture of his predecessor on the White House’s new Presidential Walk of Fame, Mr. Trump put one of an autopen signing Joe Biden’s name? The Trump administration now wants a $1 semiquincentennial coin with images of Mr. Trump on both sides. Of course.
Worse, Mr. Trump has sent troops into at least three of America’s big cities, including Los Angeles and Washington, on bogus justification. Pliant Republican majorities in Congress, cowed executive branch officials and courts that move slowly, if they act at all, too often just watch as this happens.
The country can debate whether and how to design new laws to check its most powerful people. But the excesses would end sooner if more Americans saw what Mr. Trump and Mr. Musk are doing: ushering in a new era of brazenness that will persist as long as people buy the hype and cheer the flexes.
William D. Cohan is a co-founder of Puck and the author of seven books. His latest, “Power Failure,” is a history of General Electric.
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