Tesla’s chairman has raised the possibility of Elon Musk walking away from the electric car maker if shareholders don’t back the CEO’s $56 billion pay package, saying there are “other places” the businessman could spend your time.
Robyn Denholm added in a letter to investors that next week’s vote on the biggest pay deal in U.S. corporate history was “obviously not about money” because Musk would remain one of the richest people on the planet regardless. of the result.
Denholm said Musk could walk away from Tesla or spend less time at the company if the June 13 vote went against him. Investors approved Musk’s original $56bn (£44bn) pay deal in 2018, but it was overturned by a judge in January, forcing the board to ask them to ratify it again.
“What we recognized in 2018 and continue to recognize today is that one thing Elon certainly does not have is unlimited time. He is also not short of ideas and other places where he can make an incredible difference in the world,” Denholm wrote. “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.”
Musk’s other business interests include rocket company SpaceX, artificial intelligence startup xAI, and social media platform X. Some Tesla investors have expressed concern about his ability to focus on Tesla. Musk’s behavior on X, where he has more than 186 million followers, has also irritated an institutional investor in Tesla, Ross Gerber, who said he has “absolutely damaged the (Tesla) brand.”
Denholm wrote in the letter to shareholders, dated June 5, that the purpose of the 2018 deal was “to keep Elon focused on Tesla and motivated to achieve the company’s unparalleled ambitions.”
“So, keeping our end of the deal, ratifying the decision we all made in 2018, is more important than ever. “If Tesla wants to retain Elon’s attention and motivate him to continue dedicating his time, energy, ambition and vision to achieve comparable results in the future, we must maintain our agreement,” he wrote.
Referring to Musk’s fortune, Denholm added: “It’s obviously not about money. “We all know that Elon is one of the richest people on the planet, and would remain so even if Tesla reneged on the commitment we made in 2018.”
Denholm said the package, which included options to buy Tesla stock, requires Musk to wait five years before selling the shares he receives in the deal.
Musk’s fortune amounts to $203 billion. according to Bloombergmaking him the third richest person in the world.
Last month, ISS, a leading proxy advisory firm, recommended shareholders vote against the package, calling the compensation excessive. Glass Lewis, another advisory firm, has recommended voting against. Bailie Gifford, a top 15 Tesla investor, has said she plans to support the package, while Calpers, the US public pension fund and a top 25 shareholder, has said it plans to vote against it.
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Musk owns about 13% of Tesla, but the statement to shareholders ahead of the Annual General Meeting indicates that the billionaire’s stake will not count towards the vote, saying the vote should be a majority of Tesla shares “It is not owned, directly or indirectly, by Mr. Musk” or his brother Kimbal.
Denholm also asked shareholders to approve moving the company’s legal base to Texas. Tesla is incorporated in the US state of Delaware, but Musk immediately acted to change its registration to Texas, where it is based.
“Being incorporated in Texas provides the best platform for Tesla to grow and innovate because we believe that Texas legislators and courts are in the best position to develop and make fair decisions about corporate law that applies to Tesla, especially when our next big bet pays off. beyond the wildest expectations,” Denholm wrote.
Dan Ives, an analyst at US stockbroker Wedbush Securities, said Musk is “not going anywhere” but could give up his CEO title and become less involved in Tesla if the vote goes against him.
“Musk isn’t going anywhere, but if he is denied the compensation package, he will potentially lose his CEO title and become less involved in Tesla over time,” Ives said.
