Tesla shareholders are preparing to vote on June 13th regarding CEO Elon Musk’s $56 billion compensation package, following a Delaware judge’s decision to void the initial approval due to procedural flaws.
Tesla’s board chair, Robyn Denholm, has urged shareholders to endorse the pay plan, emphasizing the unique contributions of Elon Musk and the need for exceptional incentives to keep him focused on Tesla despite his numerous ventures.
In a letter to shareholders filed with the Securities and Exchange Commission, Denholm noted that typical compensation models do not suit Musk’s extraordinary role, warning that failing to approve the package could drive him to pursue other opportunities.
“Elon is not a typical executive, and Tesla is not a typical company,” Denholm wrote. “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.”
She highlighted Musk’s achievements and the huge value he has created for Tesla, arguing that the pay package is not just about money but about recognizing and motivating his continued efforts.
Despite Denholm’s appeal, several proxy advisory firms have advised against approving the proposal, pointing to concerns over Musk’s divided attention between Tesla and his other enterprises like SpaceX, Neuralink, and xAI.
However, early voting trends show a majority of shareholders might back the compensation package, with reports indicating that 80 of early voters are in favour.
Adding to the tension, Elon Musk is seeking to increase his stake in Tesla to 25% to advance his AI and self-driving car vision.
Currently, he holds about 13% of the company after selling shares to fund his acquisition of X (formerly Twitter).
Denholm’s letter points to the potential consequences of not approving the package, noting Elon Musk might consider leaving Tesla if the shareholders do not honour their commitment to him.
“We all made a commitment to Elon. Elon honoured his commitment and produced tremendous value for our stockholders. Honouring our commitment to Elon demonstrates that we support his vision for Tesla and recognize his extraordinary accomplishments — this is what will motivate him to continue to create value for stockholders.”
The upcoming vote will determine Elon Musk’s compensation and also his level of involvement in the company.
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