TESLA SHAREHOLDERS WARNED: APPROVAL OF $56 BILLION PAY PACKAGE CRITICAL TO RETAIN CEO ELON MUSK
In a recent call to action, Robyn Denholm, the chair of Tesla’s board, has urged the company’s shareholders to give their seal of approval to Elon Musk’s substantial $56 billion compensation package. Denholm emphasized the significance of this decision, highlighting the potential ramifications if shareholders fail to support the proposal. “We must recognize the value of retaining Elon’s exceptional leadership,” Denholm stated, “or risk losing him to other opportunities.” This plea underscores the critical role Musk plays within Tesla and the importance of incentivizing his continued dedication and innovation.
On June 13th, Tesla shareholders are poised to determine the future of Musk’s lucrative compensation package, projected to reach a staggering $56 billion. This pivotal vote marks the second instance where shareholders will weigh in on the CEO’s pay, following a previous nullification by a Delaware judge earlier this year, citing substantial flaws in the approval process. Presently, the company is undertaking extensive efforts to rally support and persuade shareholders to greenlight the proposal once again.
“ELON IS NOT A TYPICAL EXECUTIVE, AND TESLA IS NOT A TYPICAL COMPANY”
In a letter addressed to shareholders and filed with the Securities and Exchange Commission, Denholm eloquently articulates, “Elon is not a typical executive, and Tesla is not a typical company.” She underscores the unique nature of both Musk’s leadership and Tesla’s innovative endeavors. Denholm further asserts, “So, the typical way in which companies compensate key executives is not going to drive results for Tesla. Motivating someone like Elon requires something different.” This statement encapsulates the essence of Tesla’s unconventional approach to leadership and the necessity for a compensation structure that aligns with Musk’s extraordinary vision and drive.
Later in her letter, Denholm subtly suggests the possibility of Musk exploring opportunities elsewhere in the absence of adequate motivation. “What we recognized in 2018 and continue to recognize today is that one thing Elon most certainly does not have is unlimited time,” Denholm emphasizes. She goes on to highlight, “Nor does he face any shortage of ideas and other places he can make an incredible difference in the world.” Denholm stresses the importance of retaining Musk’s valuable contributions within Tesla, emphasizing the mutual respect necessary for such a collaboration to flourish.
Denholm underscores that the impending vote on the $56 billion pay package, potentially elevating Musk to the status of the most highly compensated chief executive in modern history, transcends monetary considerations. “It’s not about the money,” Denholm asserts unequivocally. She acknowledges Musk’s formidable wealth, stating, “We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018.” This statement underscores the deeper significance of the compensation package in securing Musk’s continued dedication and contributions to Tesla’s mission.
WE ALL KNOW ELON IS ONE OF THE WEALTHIEST PEOPLE ON THE PLANET
Despite several proxy firms advising against Musk’s pay proposal, early voting trends indicate he might secure the approval he seeks. According to a report from trading platform eToro last month, approximately 25 percent of Tesla’s shares have already been cast, as noted by Reuters. Among those votes, over 80 percent were in favour of Musk’s compensation package, suggesting strong shareholder support despite the recommendations to the contrary.
Musk is still striving for greater control over Tesla, aiming to secure a 25 percent stake to advance his ambitious goals in artificial intelligence and self-driving cars. Currently, Musk owns about 13 percent of the company, having sold billions of dollars’ worth of shares to acquire Twitter. On X, he has warned that if his demands are not met, he might consider spinning out Tesla’s AI work into a separate company.
Shareholders are now being cautioned—through a letter laden with implications—that Musk might depart from Tesla if his pay package isn’t approved.
“We all made a commitment to Elon,” Denholm writes. “Elon honored his commitment and produced tremendous value for our stockholders. Honoring our commitment to Elon demonstrates that we support his vision for Tesla and recognize his extraordinary accomplishments—this is what will motivate him to continue to create value for stockholders.”