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Tesla’s chairperson, Robyn Denholm, is urging shareholders to approve Elon Musk’s $56 billion compensation plan, emphasizing the risk of losing the billionaire CEO if he is not adequately incentivized. The vote, set for June 13th, will decide the fate of Musk’s substantial pay package, labeled as the largest ever approved for a CEO. This will be the second vote on the matter. With the new vote on the horizon, Tesla is making concerted efforts to persuade shareholders to endorse the proposal once more.
In a letter to shareholders filed with the Securities and Exchange Commission (SEC), Denholm highlighted Musk’s unique role and Tesla’s distinct nature. “Elon is not a typical executive, and Tesla is not a typical company,” Denholm wrote. Denholm suggested that without appropriate incentives, Musk might shift his focus to other ventures.
“What we recognized in 2018 and continue to recognize today is that one thing Elon most certainly does not have is unlimited time,” Denholm stated. “Nor does he face any shortage of ideas and other places he can make an incredible difference in the world. We want those ideas, that energy, and that time to be at Tesla for the benefit of you, our owners. But that requires reciprocal respect.” Denholm’s letter reflects investor anxiety about Musk’s future with the company if his compensation package isn’t approved.
However, not everyone is in favor of Musk’s compensation package. Steve Westly, Tesla’s former audit committee chair and a notable clean technology venture investor, announced he would not support the $56 billion pay package. He cited concerns over Tesla missing quarterly numbers, slowing growth, and recent workforce reductions as reasons for opposing the proposal.
“Elon has done an extraordinary job; he’s built one of the transformational companies of the age. But to ask for a $55 billion pay increase at precisely the time when you’ve missed quarterly numbers, growth is slowing down, and you’ve laid off 15 percent of the workforce is, I’d say, hubris, to say the least,” Westly remarked during a CNBC appearance. In addition, Musk’s involvement in various other ventures, such as SpaceX, The Boring Company, Neuralink, X, and xAI, has raised concerns about his commitment to Tesla.
In addition to the proposed pay package, Musk is seeking a larger stake in Tesla—25 percent—to advance his goals in artificial intelligence and self-driving technology. He holds around 13% of the company, having sold billions of dollars worth of shares to fund his acquisition of Twitter. On his platform, X, Musk has even threatened to spin off Tesla’s AI work into a separate entity if his demands are not met.
Denholm’s letter serves as a strategic appeal to shareholders, subtly warning that Musk could potentially leave Tesla if the proposed compensation isn’t approved. The upcoming vote on Musk’s compensation package underscores the delicate balance between retaining exceptional talent and safeguarding shareholder interests. As Tesla shareholders prepare to cast their votes, they hold the power to shape the future of the company and its leadership.
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