Tesla’s board chair, Robyn Denholm, is urging shareholders to approve Elon Musk’s extraordinary $56 billion compensation package, cautioning that rejecting the proposal might lead the CEO to explore other opportunities.
Scheduled for June 13th, Tesla’s shareholders will cast their votes on Musk’s pay plan, potentially worth up to $56 billion. This will be the second vote on the package, as a Delaware judge nullified the initial approval earlier this year, citing flaws in the process. In response, Tesla is intensifying efforts to persuade shareholders to support the proposal once more.
“Elon is not a typical executive, and Tesla is not a typical company,” Denholm stated in a letter to shareholders filed with the Securities and Exchange Commission. Hence, a conventional compensation strategies won’t yield results for Tesla, as motivating someone like Elon requires a unique approach.
Denholm suggests that without adequate motivation, Musk could shift his focus elsewhere. “What we recognized in 2018 and continue to recognize today is that one thing Elon most certainly does not have is unlimited time,” she wrote.
She points out that Musk has a breadth of ideas and other ventures where he could make a significant impact, including his leadership roles at SpaceX, The Boring Company, Neuralink, X, and xAI. These ventures, while impressive, divert his focus from Tesla, the main contributor to his wealth and notoriety.
Is It Really About the Money?
The decision on Musk’s compensation, which would make him the highest-paid CEO in recent history, transcends monetary value. Denholm contends that the decision to approve this pay package is less about the financials—given Musk’s existing wealth—and more about showing support for his vision and leadership at Tesla.
Despite some proxy firms advising against the compensation plan, preliminary voting indicates potential approval. Early voting results reported by trading platform eToro, according to Reuters, show that about 25 percent of Tesla’s shares have already been cast, with over 80 percent favoring Musk’s compensation package.
Musk is also seeking greater influence within Tesla, aiming for a 25% stake to further his goals in AI and autonomous vehicle development. Currently holding around 13% of Tesla after divesting shares to fund his acquisition of Twitter, he has hinted on X at possibly spinning off Tesla’s AI division if his compensation demands are not met.
Denholm’s letter, rich with implications, serves as a stark reminder to shareholders: Musk might leave Tesla if his compensation package is not approved.
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