The chair of Tesla, Robyn Denholm, has hinted that Elon Musk might reduce his involvement with the electric car company if shareholders do not approve his $56 billion (£44 billion) pay package. She emphasized in a letter to investors that the upcoming vote on the largest compensation deal in U.S. corporate history is “obviously not about the money” since Musk would remain one of the world's richest individuals regardless of the outcome.
Denholm suggested that Musk could step back or spend less time at Tesla if the June 13 vote goes against him. Although shareholders initially approved Musk’s pay deal in 2018, it was overturned by a judge in January, necessitating a new vote.
“What we recognized in 2018 and continue to recognize today is that one thing Elon most certainly does not have is unlimited time. Nor does he face any shortage of ideas and other places he can make an incredible difference in the world,” Denholm wrote. “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.”
Musk’s other ventures include SpaceX, the AI startup xAI, and the social media platform X (formerly Twitter). Some Tesla investors have raised concerns about Musk's focus on Tesla, particularly given his activity on X, which has sometimes negatively impacted the Tesla brand, according to investor Ross Gerber.
In her June 5 letter, Denholm reiterated that the 2018 deal aimed to keep Musk focused and motivated to achieve Tesla’s ambitious goals. “Upholding our end of the bargain, then, by ratifying the decision we all made in 2018, is more important than ever,” she wrote. “If Tesla is to retain Elon’s attention and motivate him to continue to devote his time, energy, ambition, and vision to deliver comparable results in the future, we must stand by our deal.”
Denholm emphasized that the pay package, which includes options to buy Tesla stock, requires Musk to hold the shares for five years before selling. Despite Musk’s substantial wealth, currently estimated at $203 billion by Bloomberg, advisory firms ISS and Glass Lewis have recommended shareholders vote against the package, calling it excessive. However, investor Bailie Gifford supports it, while Calpers, the U.S. public pension fund, plans to vote against it.
Musk owns about 13% of Tesla, but his stake will not count towards the vote, as the decision must come from a majority of Tesla stock “not owned, directly or indirectly, by Mr. Musk” or his brother Kimbal.
Denholm also asked shareholders to approve relocating the company’s legal base to Texas from Delaware. “Being incorporated in Texas provides the best platform for Tesla to grow and innovate,” she wrote, highlighting Texas's favorable legislative and judicial environment for corporate law.
Analyst Dan Ives from Wedbush Securities stated that Musk is unlikely to leave Tesla but might drop his CEO title and reduce his involvement if the compensation package is rejected. "Musk is not going anywhere but if the comp package is denied, he will potentially shed his CEO title and become less involved in Tesla over time," Ives said.
No comments:
Post a Comment