Tesla shareholders are slated to vote on June 13 to determine the fate of Musk’s pay package. This marks the second shareholder vote on the issue after a Delaware court deemed the initial approval process “deeply flawed” earlier this year, invalidating the previous ruling.
Elon Musk, the billionaire CEO of Tesla, may consider leaving the company if shareholders reject his $56 billion compensation package, warned board chair Robyn Denholm. As reported by The Verge, Denholm indicated that Musk could potentially divert his focus to other ventures.
Denholm, in her letter to shareholders filed with the Securities and Exchange Commission, underscored the significance of the compensation plan, emphasizing that it’s not merely about financial gain.
She noted that, despite making Musk the highest-paid CEO in modern history, the package aims to ensure his sustained focus and motivation toward achieving Tesla’s ambitious goals.
Denholm stressed that Musk’s leadership is critical for Tesla’s pursuit of groundbreaking advancements, particularly in artificial intelligence and self-driving technology.
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“Elon is not a typical executive, and Tesla is not a typical company. 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.”
“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. “
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. 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,”
“Upholding our end of the bargain, then, by ratifying the decision we all made in 2018, is more important than ever. 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.”
The 2018 compensation deal was specifically designed to keep Musk engaged with Tesla’s long-term vision and strategic objectives. However, Musk’s involvement in other ventures, including SpaceX, X, and xAI, has sparked investor concerns about his ability to dedicate sufficient attention to Tesla.
Further complicating the scenario, Musk is pursuing a 25% ownership stake in Tesla. This significant interest would enhance his influence over the company’s direction, enabling him to drive forward his ambitious goals. He has also hinted at the possibility of spinning off Tesla’s AI research into a separate entity if his compensation package is not approved.
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In addition to the compensation plan, Denholm urged shareholders to support the relocation of Tesla’s corporate registration from Delaware to Texas, aligning with the company’s headquarters move. This strategic shift, as reported by The Guardian, reflects Musk’s broader vision for Tesla’s future operations.
As the shareholder vote approaches, the outcome will significantly impact Tesla’s leadership and strategic direction, determining whether Musk will continue to steer the electric vehicle giant or potentially shift his focus to other groundbreaking ventures.