The shareholders would pay for Musk's pay package by having their shares diluted. It's not as if Tesla has to provide any money for that, so it's not really comparable to giving employees a raise.

> so it's not really comparable to giving employees a raise

Employees can (and most often are) paid in those company shares as well, so no difference.

Money is money. In theory they could dilute the shareholders by issuing new shares into the market and use the money to pay employees more. But this fails to identify what magic is to be used to cause them to want to do that.

Employers (and employees) generally have a pretty good idea what the market price is for a particular job. If they have to fill 100 positions and offering $25/hour causes them to get 100 qualified applicants who accept the position, they could offer $35/hour, but this is like saying that the employees could accept $15/hour when another employer is offering $25. Some explanation is required for why they would.

Tesla is a public company. If the board doesn't think Elon Musk is worth that amount of money, they don't have to pay it to him, and have the incentive not to -- the shareholders would get to keep the money instead. But maybe he is worth that amount of money; he's a one-man marketing machine and owns a major social media company that can influence the public perception of the company. That could very well be worth that amount of money to the company over a period of years -- and it isn't a single year's compensation.

So then we're back to it being a competitive market. If the company gets e.g. $60B in value from having Elon Musk, and he knows this and demands $56B, the company can either pay the market price or have a net loss of $4B relative to the alternative. And then have even less money to pay employees.

Or maybe he isn't worth that much and if the shareholders give it to him then it's costing the company money. But then that's maladaptive and the company will lose business to some other company that pays its executives less and uses the money to lower the price of their cars and gain a competitive advantage while still paying the market rate for other types of labor.

Either way it doesn't change the market price for those other types of labor, which are much easier to estimate than the value of certain unusual executives.

> If the board doesn't think Elon Musk is worth that amount of money, they don't have to pay it to him

Well, if you're following that drama, that is how it is supposed to work and how the Delaware judge said it needs to work.

So, now Musk just want to move the incorporation to TX, where he can order the board to pay him whatever he wants without oversight.

The compensation package was approved by the shareholders, not just the board, but then the judge didn't like the disclosures for the shareholder vote and invalidated it. Musk obviously didn't like that and is now behaving in the usual way, but whatever. He's going to put it up for another vote and the shareholders are going to approve it again or they won't.