Elon Musk's $56BN Tesla Pay Package: How Much is Too Much? | Vantage with Palki Sharma

there is a business philosophy it says that the best financial bargain is a CEO the chief executive officer the highest ranking employee within any organization usually simply put the philosophy means this you cannot overpay a good CEO and you cannot underpay a bad one but who decides this pay what justifies it and how much is too much pay we ask because Elon Musk he's in the news again this time over his pay musk is the CEO of Tesla Motors he took the position in 2018 guess how much he was paid for it a record-breaking $ 55.8 billion I'll repeat that for you nearly $56 billion per year it is jaw dropping and if the jaw can drop any further let me tell Indian viewers it is over 46 carbs in Indian rupees that's 46 + 11 Z Elon musk's compensation was the largest corporate pay deal ever in 2022 the package was six times larger than the combined pay of the 200 highest paid Executives in 2021 but don't let this dampen the joy of your payday just as Tesla agreed to pay musk $56 billion a share sh holder filed a lawsuit against musk and Tesla his name is Richard toretta he claimed that the pay was excessive and he blamed Tesla's board for it according to tornetta the board decided the pay but they did not act independently musk improperly dictated negotiations the case went to court in Delaware after 5 years the judgment is finally here the judge has tossed out musk pay package call calling it and I'm quoting an unfathomable sum so what happens next musk May appeal the ruling or Tesla's board may have to come up with a new proposal for him musk is currently the richest person in the world this could drop him down to number three shocking I know this is affecting Tesla too hours after the ruling its shares fell by 3% but most of all this ruling is being seen as a warning not just to Tesla but to companies everywhere in the world that award their executives exorbitant sums and stop me if you've heard this one before but CEOs are unbelievably well-compensated High Sky CEO pay is no secret and it keeps Rising further into the stratosphere sometimes even when CEOs do not even take up positions like in September 2022 lakshman narasimman was hired as the new Starbucks CEO he was said to take to make about $18 million a year but even if he did not join by next April he would still be making $8 million so what justifies the fat paychecks of these big cats CEOs are key to success for starters they create wealth for the shareholders which is their primary goal top bosses are Visionary leaders or expected to be their decisions affect every employee and customer they have to take big risks and they must re big rewards which is what apparently explains the gulf between a CEO's paycheck and their typical employes but how vast can this gulf be let me show you some numbers this is the ratio of CEO pay to a typical workers's pay in the 1960s it stood at 20 to1 so if the CE is making $20 an average worker is making one by 2019 this Gap Rose to 300 to1 and with every passing year year it gets worse in America the average pay Gap is 670 to1 but remember that's the average at wmart for instance the pay ratio is 983 to1 at Coca-Cola it is 1,621 to1 at Amazon it is 6,474 to1 in 2019 Disney CEO Bob Iger got a pay package of $66 million it was more than 1,000 times the median pay of Disney employees this is staggering but most Nations have a similar story in India the top paid Executives receive annual pay off about a million on average an average worker earns $122,000 in the UK CEOs make $5 million for the average worker it is about $40,000 in South Africa CEOs earn $800,000 workers make $1,600 studies say you'd have to work work five lifetimes to make what your boss makes in one year and this rarely changes even when crisis strikes during the first year of the pandemic CEO pay jumped 19% even as many businesses ground to a halt so while it is true that CEOs bring massive value to a company at some point this pay disparity appears fundamentally unfair studies show that it also builds resentment it can be demoralizing it can lead to employee backlash which comes out in ugly ways lower paid employees shrug off responsibilities or leave their jobs or go on strikes recently we saw all of this with the Hollywood writer strike and the Detroit Auto Workers protests because people make a lot of work decisions based on pay not just what they are being paid but also what others around them are it affects a lot of people Plus does it even help CEOs all that much these high pay packages studies say not really increasing CEO pay is not linked to increasing CEO productivity so a CEO salary should not be an extreme sport because it can be just as bad for Optics as it is for business

Channel: Firstpost

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Id: um_QExQozP4

Length: 6min 39sec (399 seconds)

Published: Wed Jan 31 2024