Vanguard’s John Bogle would have been aghast at Elon Musk’s pay deal with Tesla

It’s not in keeping with Vanguard’s brand to approve the biggest compensation deal in corporate history

John Bogle, the late founder of Vanguard. It is highly unlikely that he would have approved of Elon Musk's massive pay package at Tesla. Photograph: Ryan Collerd/New York Times

Tesla’s retail investors were expected to approve Elon Musk’s multibillion pay package. More surprising is that index fund giant Vanguard, Tesla’s largest shareholder apart from Musk himself, approved the $56 billion (€52.3 billion) deal.

Musk is an icon to Tesla’s retail shareholders, but some institutional shareholders were wary. Norway’s sovereign wealth fund, the largest in the world, voted no. So did Calpers, US’s biggest pension fund.

Of course, Vanguard was not the only institutional shareholder to approve the deal, with BlackRock and Baillie Gifford also in favour. Vanguard might add that the fact it voted against Musk’s proposed pay deal in 2018 should not preclude it from doing an about-turn.

One can be squeamish about the astronomical 2018 deal while also believing it should be honoured. Even long-time Tesla bear Jim Chanos took that view, saying he was “not a big fan of Elon”, but a “deal’s a deal even if it’s a bad deal, and they agreed to it”.


Still, it’s not in keeping with Vanguard’s brand to approve the biggest compensation deal in corporate history. Vanguard is a non-profit company owned by those who invest in its low-cost funds. Its founder, the late John Bogle, often railed against the idea that executives be rewarded for higher stock prices, saying in 2008 that CEO compensation is “seriously out of line” and often characterised by “excessive and unreliable lottery-type rewards”.

Would Bogle, the champion of low-cost investing for ordinary investors, have approved of Musk’s huge pay deal? Unlikely – very unlikely.