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Tesla’s (TSLA) Board Chair Robyn Denholm has issued a fervent appeal to shareholders, urging them to approve CEO Elon Musk’s proposed compensation package valued at approximately $1 trillion. In a letter released ahead of Tesla’s annual meeting on November 6th, Denholm emphasized Musk’s vital role in the company’s future, particularly as it pivots beyond its electric vehicle core to encompass Full Self-Driving (FSD) technology and its humanoid robot project, Optimus.
Denholm articulated the board’s position, stating that dismissing the package could significantly devalue Tesla, potentially undermining its ambitious vision. “Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become,” she asserted, underscoring the perceived link between Musk’s leadership and the company’s long-term prospects.
Speaking on CNBC’s “Squawk Box,” Denholm highlighted the crucial role of artificial intelligence (AI) in Tesla’s future trajectory. She emphasized the company’s unique AI capabilities and Musk’s contributions, arguing that these elements present a significant future opportunity for Tesla.
However, the proposed compensation package faces considerable opposition. Institutional Shareholder Services (ISS), a prominent proxy advisory firm, has recommended against the plan. ISS’s analysis likely hinges on concerns regarding the sheer size of the award and potential dilution of shareholder value. Proxy advisors often evaluate the alignment of executive pay with company performance and industry benchmarks.
Further intensifying the debate, several unions and corporate watchdog groups have launched the “Take Back Tesla” campaign. This initiative urges shareholders to reject the compensation package, citing concerns over Musk’s increasingly public embrace of right-wing political movements and amplification of conspiracy theories, which they contend could damage the Tesla brand. This represents a growing trend where ESG (Environmental, Social, and Governance) factors, including a company’s brand image and societal impact, are increasingly influencing shareholder decisions.
The shareholder vote for Musk’s pay package, alongside other proposals, is scheduled to close at 11:59 p.m. ET on November 5th.
Tesla’s recent third-quarter earnings report, while showing a 12% increase in revenue after consecutive declines, missed analysts’ expectations. This mixed performance adds another layer of complexity to the shareholder vote. Revenue growth is crucial for Tesla to fund its ambitious expansion plans, including Gigafactory build-outs and autonomous driving development.
The proposed compensation plan, detailed by the board in September, is structured around 12 tranches of shares awarded upon achieving specific milestones. These milestones likely encompass a combination of financial metrics, such as revenue and profitability targets, and operational goals, like the launch of new products or features.
Beyond compensation, the agreement would grant Musk increased voting power within the company. Musk has repeatedly expressed his desire for greater control, particularly concerning the development and deployment of Optimus robots. He stated on Tesla’s earnings call, “If we build this robot army, do I have at least a strong influence over that robot army? I don’t feel comfortable building that robot army if I don’t have at least a strong influence.”
If fully realized, the award would provide Musk with over 423 million additional shares, increasing his stake from approximately 13% to around 25%. This level of ownership would afford him significantly greater influence over company strategy and decision-making.
Defending the proposal, Denholm emphasized that the arrangement is less about compensation and more about ensuring Musk’s continued influence in guiding the company’s AI development trajectory. “He’s been very consistent in that view, in terms of having enough influence over the vote of Tesla in the future so that bad things can’t happen with the AI,” she told CNBC.
Denholm also highlighted the composition of Tesla’s shareholder base, noting that retail traders account for roughly 30%. She added that last year saw record voter turnout.
In addition to the vote on Musk’s pay, shareholders will also be casting ballots on the re-election of Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson-Thompson to the board.
Tesla year-to-date stock chart.
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Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/11665.html
