Tesla’s chairperson, Robyn Denholm, is urging shareholders to approve Elon Musk’s $56 billion compensation plan. The vote, scheduled for June 13th, will determine the fate of the CEO’s enormous pay package, described as the largest ever approved for a CEO. This is the second vote on the issue after a Delaware judge nullified the first one due to significant flaws in the approval process.
Denholm highlights Musk’s unique role and Tesla’s exceptional nature in a letter to shareholders filed with the Securities and Exchange Commission (SEC). She argues that traditional compensation strategies are insufficient for someone like Musk, who is the wealthiest person on the planet.
Steve Westly, Tesla’s former audit committee chair and a prominent clean technology venture investor, has announced his opposition to Musk’s pay package. He believes it is excessive, especially during a time of missed quarterly numbers, slowing growth, and workforce layoffs.
Denholm insists that the proposed pay package is not about the money, emphasizing that Musk’s existing wealth ensures his status as one of the richest individuals globally, regardless of Tesla’s compensation decisions. The central issue, she argues, is ensuring Musk’s continued dedication to Tesla and its shareholders.
Despite recommendations from several proxy firms against Musk’s pay proposal, early voting indicates strong shareholder support. A report by the trading platform eToro revealed that about 25% of Tesla’s shares had already voted, with over 80% in favor of Musk’s package, according to Reuters.
In addition to the proposed pay package, Musk is seeking a larger stake in Tesla—25%—to advance his goals in artificial intelligence and self-driving technology. He currently holds approximately 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 is a strategic appeal to shareholders, laden with subtle warnings that Musk could potentially leave Tesla if the proposed compensation isn’t approved. The upcoming vote 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 trajectory of the electric vehicle pioneer, weighing the potential risks and rewards of one of the most significant compensation packages in corporate history.
