Tesla shareholders approve record pay for Musk. Are pricey CEOs worth it?

At their annual meeting in Texas, shareholders of Tesla on Thursday took the latest step in a strange corporate tale of outsize pay for – and faith in – an unconventional CEO. A majority approved, for the second time, a record-breaking pay package that could exceed $45 billion for Elon Musk. It was a personal triumph for the highly successful serial entrepreneur and a rebuff to the Delaware judge who rescinded the original package that shareholders approved in 2018. Tesla will use the symbolic vote as evidence to persuade the judge to approve the package.

The move also poses in the starkest terms a question that companies and economists have wrestled with for decades: How much is a CEO worth? Last year, the median CEO pay – the middle amount among S&P 500 companies – was about $16 million. That's higher than what most CEOs receive in other countries and nearly 200 times what the median American worker takes home in a year, according to a new analysis for The Associated Press.

Such sums might seem patently unfair. Many progressives point out that the gap further widens the already yawning divide between America's richest and regular workers. In 1980, counting in a slightly different way, the average CEO earned only about 40 times the average employee's pay and benefits. On the other hand, the best CEOs create enormous value: new products and services for consumers, bigger profits for shareholders, and more jobs for workers.