Tesla asks shareholders to restore Elon Musk's $56B pay package

Ever come to the end of the year, looked at your annual payslip and felt a bit like you deserve more?

Well, spare a thought for Elon Musk, consistently one of the three richest men in the world, who needs to get approval for a $56 million pay packet. The pay comes in the form of a stock package that was meant to start coming his was in 2018 and continue for 10 years.

Musk had that package rejected by a Delaware judge earlier this year and now needs Tesla shareholders to approve it, which is a slightly taller order than it might have been a few years ago.

Tesla is asking shareholders to restore a $56 billion pay package for CEO Elon Musk / ANGELA WEISS / Contributor / Getty

Tesla's stock price has not been in the rudest health this year, after all, falling 37% already, so it'll be interesting to see whether Musk's request is approved.

However, despite that recent turbulence, Musk and his team are arguing that the overall growth metrics agreed in 2018 have been clearly surpassed, with Tesla's share price up by more than 500% since then.

While the headline-grabbing total that Musk is asking for is massive, it can also be contextualised a little, as explained by the Chairperson of the board of directors at Tesla, Robyn Denholm.

She wrote: "Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value. That strikes us - and the many stockholders from whom we already have heard - as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it."

So, the chair of the board of directors is clearly very much on board with the request (which shouldn't be too surprising since a good relationship with Musk is surely a must in that position).

However, it's still over to the shareholders to re-approve the plan - and even then, it might be questioned and rejected once again by Delaware's judges.

If that happens, a replacement plan will need to be agreed and possibly even back-dated, which could take time and expensive resources up, so it would seem that Tesla has got itself into quite a bind.

The key question being assessed by the judge each time someone looks into this is whether shareholders are being given fair value by the pay package, to stop CEOs from just taking outrageous pay without any checks or balances.

In each case, though, it requires a shareholder to bring the case through the system - the state won't just look into this of its own accord.