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Elon Musk isn't alone as more CEOs ask for bigger pay packages

Tesla (TSLA) CEO Elon Musk has been breaking barriers, so to speak, in his recent campaign to pass through his $56 billion compensation package. Tesla shareholders are set to vote on this on June 13 after the Delaware Chancery Court struck it down. But Musk isn't the only chief executive seeking enormous executive pay packages.

Yahoo Finance Legal Reporter Alexis Keenan explains the current trend of CEOs demanding and receiving large compensation packages, and the year-over-year growth of these packages.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

Video transcript

Well, on June 13th, Tesla shareholders will have another chance to vote on Ceo Elon Musk's pay package that's been worth as much as $56 billion.

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The compensation remember was invalidated by Delaware Judge earlier this year, but Musk is not the only company leader who's been pushing compensation packages higher young finances, Alexis Keenan has the details.

Hi, Alexis.

Hi Julie.

So yeah, if you look at CEO pay, it's on the rise.

If you look at the Russell 3000 kind of a broad look at CEO awards in the five year period that came right after that must pay package.

So from 2018 to 2022 you have among all CEO S in that index up 6.2%.

If you look at CEO S that are running companies with revenues exceeding 20 billion, that's more modest 2.4%.

But then the big whopping number are for those CEO S and companies with that less than 50 million an annual revenue mark at 19.3%.

So how do you put this all in perspective with that must pay package given that he didn't have really these annual awards yet that just that big 2018 $56 billion package as we now know in hindsight.

So if you try to compare, you can look at, let's say the highest paid CEO S of 2023.

In that case, Broadcom's Hot Tan, he was awarded 100 and $62 million mostly in stock awards that vested uh over five years.

Um You have then Palo Altos Networks, Ns Aurora coming in second place, awarded 100 and $51 million plus some per uh performance based stock options there.

Uh You could also take a look at CEO pay at the largest US companies.

So let's say companies that have revenues for annual revenues exceeding a billion dollars there.

You have the median in 2022 up 7.7% over the prior year, you jump over to 2023 up 11.4% over 2022.

So under Musk's deal that had a 10 year period.

So he had to try to meet these performance goals that are in that package over 10 years.

Now, that was pairing revenue marks, profit marks market cap requirements, all these milestones.

And if you hit them, it opened up these 12 different buckets of stock options and that is worth approximately give or take about 1% of Te Tesla's equity uh but had that been spread over 10 years, let's say it.

And we know it's not because you already achieved these benchmarks that would still be approximately $5.6 billion a year.

So you can kind of put that up against those other numbers that I showed you for those annual awards to try to get some sense of it.

Uh So then you have on top of that Musk owning approximately 22% of the company, all things considered his pay.

If you break it down on that 10 year basis, still really in the stratosphere.