Tesla shareholders hold the key to Elon Musk’s future with the company, as they prepare to vote on his controversial $56 billion pay package on June 13th. This is the second vote on the matter, after a Delaware court deemed the initial approval process flawed.
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Tesla’s board chair, Robyn Denholm, is leading the charge to sway shareholders. In a letter to the SEC, Denholm argues that Musk’s outsized impact on Tesla justifies an outsized compensation plan. “Typical” CEO pay structures, she argues, wouldn’t incentivize someone of Musk’s calibre.
The letter carries a veiled threat – without proper motivation, Musk could take his talents elsewhere. Denholm highlights Musk’s “limited time” and “other places” where he could make a difference. She emphasizes the importance of keeping him at Tesla, framing it as a matter of “reciprocal respect” for shareholders.
Despite Denholm’s claims, many remain unconvinced. This pay package, potentially the largest ever for a CEO, raises eyebrows. Proxy firms recommend against it, arguing it’s simply about money, not motivation. Musk is already one of the wealthiest people on the planet, they point out.
Early voting data offers some insight. According to a Reuters report, over 25% of Tesla shares have already been voted, with more than 80% favouring Musk’s package. However, a larger concern lingers – Musk’s divided focus. His leadership roles at SpaceX, The Boring Company, and other ventures raise questions about his commitment to Tesla.
Further complicating matters are Musk’s ambitions. He seeks a 25% stake in Tesla to pursue his goals in AI and self-driving cars. (His stake currently sits around 13% after selling shares to acquire Twitter.) He has even threatened to spin Tesla’s AI division into a separate company if his demands aren’t met.
Shareholders now face a pivotal decision. Approving the pay package could secure Musk’s leadership, but at a steep cost. Denying it could prompt him to leave, jeopardizing the company’s future. The June 13th vote will determine not just Musk’s compensation, but potentially the trajectory of Tesla itself.
