The battle over Elon Musk’s compensation package is heating up as a big advisory firm is recommending shareholders vote against it, and Musk fans are resorting to scare tactics.
Over the last few weeks, Tesla shareholders have been voting on several new proposals put forward by the board.
The two main proposals that the board is trying to get through are a new vote on Musk’s 2018 CEO compensation package and moving Tesla’s state of incorporation to Texas.
The two are closely related as Tesla’s board and Musk have blamed the fact that they lost a lawsuit invalidating the 2018 compensation package on the fact that the lawsuit happened in Delware, where Tesla is incorporated.
Tesla incorporated in Delaware, like many other American companies, because the states has laws extremely favorable to corporations. However, Musk believes, without any evidence, that the judge’s decision was politically motivated and believes that Tesla would have better luck in Texas.
And Tesla will need better luck because the new shareholder’s vote on the compensation package doesn’t automatically invalidate the judge’s decision to rescind the package and more legal challenges are expected. Tesla’s own lawyers admit it’s basically a poll.
Regardless, Tesla has been pushing hard for shareholders to revote in favor the package and the move to Texas.
As we previously reported, the company’s board launched a website and even started buying ads to push the vote in that direction.
The shareholder battle is starting to heat up. We recently reported on a major pension fund that has announced that it will vote against it and encouraged other shareholders to do the same.
Now Glass Lewis, a major shareholder advisory firm whose clients include a significant part of major institutional investors, announced that they are also recommending to vote against it, which they also did in 2018, and shareholders still approved the move.
On the other hand, Musk’s army of fans are resorting to scare tactics to push the vote in his direction.
We recently reported on Musk’s reiterating his threat to not build AI products at Tesla unless he has 25% control over the company.
It was confirmed today that Musk’s new AI startup, xAI, has raised $6 billion a new series B round at a $24 billion valuation.
Some of his biggest sycophants, like unofficial chief propagandist Omar Qazi, are now pushing the idea that if they don’t decide to give Musk everything he wants, he will go after Tesla’s AI efforts through its newly funded xAI:
This is basically suggesting that shareholders should fold to Musk’s threat.
During the litigation over the compensation package, Musk was directly asked if the package being voted down by shareholders would make him leave Tesla and he said no.
However, things could have changed since, but the CEO is conveniently not commenting on this now – seemingly preferring to let his sycophants spread the fear that he would leave Tesla if they don’t vote for his pay package again.
Electrek’s Take
I have a hard time believing that Elon would leave Tesla if the package doesn’t go through. That would be giving up and that’s not his type. Also, I haven’t seen many Tesla shareholders argue that he shouldn’t get paid.
I think the vast majority of shareholders agree that Elon should get paid, but they want Tesla to address the clear governance issues that led the package to be revoked in the first place and that re now more evident than ever as the board is letting the CEO openly making threats to shareholders.
In my opinion, Tesla needs stronger governance because Elon simply doesn’t have the right temperament to lead a public company. Like Leo Koguan, Tesla’s largest retail investor, said, Elon is running Tesla like a family business.
We are now seeing the repercussions with the threats, the way he fired the entire Supercharger teams to set an example to other execs, and this pay package being rescinded.
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- Source: https://electrek.co/2024/05/27/battle-over-elon-musks-tesla-comp-package-heats-up/