Kara Sears
Tesla has been criticised for its pay packages, with a Delaware judge voiding Elon Musk's $56 billion pay package, calling it an unfathomable sum that was unfair to shareholders. In 2023, Tesla was also found to have broken U.S. labour laws by silencing workers and telling them not to discuss pay or working conditions.
| Characteristics | Values |
|---|---|
| Location | Florida |
| Year | 2021 |
| Ruling body | National Labor Relations Board (NLRB) |
| Ruling | Tesla managers broke U.S. labor laws by telling employees not to discuss pay and working conditions |
| Action | Tesla ordered to cease and desist from violating workers' rights |
| Additional violations | Tesla CEO Elon Musk broke labor laws by tweeting that employees could lose stock options |
| Musk's pay package | $56 billion, the largest in corporate America |
| Musk's pay package status | Voided by a Delaware judge in 2024 |
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What You'll Learn
- Tesla managers broke U.S. labour laws by telling employees not to discuss pay
- Tesla broke U.S. labour laws by silencing workers
- Elon Musk's $56 billion pay package was ruled unfair to shareholders
- Tesla's law firm drafts Delaware bill to salvage Musk's pay package
- Musk's 2018 pay package was the largest CEO compensation plan in public corporate history
Tesla managers broke U.S. labour laws by telling employees not to discuss pay
The NLRB judge ordered Tesla to stop violating workers' rights and to post notice of the violations in the service centre and email it to employees. This is not the first time Tesla has been accused of breaking labour laws. In a separate incident, a U.S. appeals court upheld an NLRB ruling that Tesla CEO Elon Musk had broken labour laws by tweeting that employees could lose stock options if they joined a union.
Additionally, a Delaware judge voided Musk's $56 billion pay package from Tesla, calling it "an unfathomable sum" that was unfair to shareholders. The ruling, which can be appealed, nullifies the largest pay package in corporate America. The Tesla board has been criticised for failing to provide oversight of Musk, who has a history of fighting regulators and leading several companies simultaneously.
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Tesla broke U.S. labour laws by silencing workers
This is not the first time Tesla has been accused of breaking labour laws. In a separate incident, a U.S. appeals court upheld an NLRB ruling that Tesla CEO Elon Musk had broken labour laws by tweeting that employees could lose stock options if they joined a union. Musk's $56 billion pay package, the largest in corporate America, was also thrown out by a Delaware judge in January 2024, who called it "an unfathomable sum" that was unfair to shareholders.
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Elon Musk's $56 billion pay package was ruled unfair to shareholders
The pay package was granted to Musk in 2018 and was the largest CEO compensation plan in public corporate history, with a potential maximum value of $55.8 billion. However, in early 2024, the Delaware Court of Chancery ordered it to be rescinded. Chancellor Kathaleen McCormick wrote in her ruling that the pay plan was inappropriately set by Tesla's board, which was controlled by Musk, and that it was approved by shareholders who were misled by Tesla's proxy materials before they were asked to vote on it.
Tesla has a history of breaking labour laws. In April 2023, a U.S. labour board official ruled that supervisors at a Florida service centre violated U.S. labour law by telling employees not to discuss pay and other working conditions or bring complaints to higher-level managers. The judge ordered Tesla to cease and desist from violating workers' rights and to post notice of the violations in the service centre and email it to employees.
Additionally, about a month before that ruling, a U.S. appeals court upheld a separate NLRB ruling that Musk had broken labour laws by tweeting that employees could lose stock options if they joined a union.
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Tesla's law firm drafts Delaware bill to salvage Musk's pay package
In 2024, a Delaware judge threw out Elon Musk's $56 billion Tesla pay package, calling the compensation granted by the EV maker's board "an unfathomable sum" that was unfair to shareholders. The pay package was the largest CEO compensation plan in public corporate history, with a potential $55.8 billion maximum value.
In 2025, Tesla's law firm, Richards, Layton & Finger, drafted a bill that could salvage Musk's pay package. The proposed legislation would amend Delaware General Corporation Law, and if adopted, could pave the way for the reinstatement of Musk's 2018 CEO pay package at Tesla, worth tens of billions of dollars in options.
Tesla has a poor record when it comes to workers' rights. In 2023, a U.S. appeals court upheld a ruling by the National Labor Relations Board (NLRB) that the company's CEO, Elon Musk, had broken labor laws by tweeting that employees could lose stock options if they joined a union. In a separate incident, Tesla managers at a Florida service center were found to have broken U.S. labor laws by telling employees not to discuss their pay or working conditions.
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Musk's 2018 pay package was the largest CEO compensation plan in public corporate history
In 2018, Tesla's board approved a compensation plan for Musk worth up to around $56 billion. This performance-based package granted Musk stock options contingent upon achieving specific milestones related to Tesla's market capitalization and operational targets. Each milestone unlocked additional stock options, aiming to align Musk's incentives with the company's growth. Musk would not receive a salary or any cash bonuses as CEO, emphasizing a commitment to Tesla's long-term success.
At the time Musk was awarded the $56 billion package in 2018, his net worth was about a third of that at $20 billion, according to Forbes. The pay package was the largest CEO compensation plan in public corporate history.
However, in 2024, a Delaware judge voided Musk's pay package, calling the compensation granted by the EV maker's board "an unfathomable sum" that was unfair to shareholders. Chancellor Kathaleen McCormick wrote that the pay plan was inappropriately set by Tesla's board, which was controlled by Musk, and that it was approved by shareholders who were misled by Tesla's proxy materials before they were asked to vote on it.
Tesla has a history of breaking labour laws. In 2023, an NLRB judge ruled that managers at a Tesla service centre in Florida broke U.S. labour laws by telling employees not to discuss their pay nor their working conditions.
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Frequently asked questions
Tesla's pay package breaks U.S. labour laws.
Tesla managers at a service centre in Florida broke the law by telling employees not to discuss their pay or working conditions.
A U.S. labour board official ruled that Tesla must cease and desist from violating workers' rights and post notice of the violations in the service centre and email it to employees.
Employees at a Tesla service centre in Florida.
Yes, Tesla CEO Elon Musk broke labour laws by tweeting that employees could lose stock options.
