Tesla CEO Elon Musk’s contentious $56 billion pay plan is up for a vote on June 13. With advocates both supporting and opposing the plan making their voices heard, it raises a crucial question: Is Musk’s leadership vital to Tesla’s future? Board Chair Robyn Denholm believes it is.
“The ratification of the pay package is really about fairness, fairness to our CEO,” Denholm said. “If you look at what’s happened at the company over the last six years, tremendous value creation — and he’s led that. Obviously, the Tesla team has been instrumental in it, but if you sit back, shareholders have benefited tremendously. Up to $730 billion of value creation. Employees have benefited tremendously; they’re all shareholders in the company, so their stock has risen. Customers have been benefited. The only person not paid is the leader of the company, Elon.”
Denholm is urging company shareholders to green light the package after it was voided by a Delaware judge in January, warning that it could lead the carmaker’s CEO to explore opportunities elsewhere.
In a recent Securities and Exchange Commission (SEC) filing, Denholm wrote that the package is crucial, not just for its monetary value but as a sign of mutual respect and commitment.
“One thing Elon most certainly does not have is unlimited time,” Denholm said. “Nor does he face any shortage of ideas and other places he can make an incredible difference in the world. 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.”
Despite some firms advising against the package, early votes show significant support for Musk.
Earlier this year, Straight Arrow News spoke with Ross Gerber, the CEO of Gerber Kawasaki Wealth and Investment Management and a longtime Tesla investor. Gerber’s firm holds $50 million worth of Tesla shares.
“The first is obviously Elon needs to stop, you know, being on Twitter every day and start running Tesla,” Gerber said. “If you look at his tweets, he basically spends no time talking about Tesla at all. It’s not even in his thought process. And so the fact that he’s CEO of the company is part of the problem. Now I’d like to have Elon back as a full-time CEO of Tesla, but if he’s not willing to do it, it’s time for Tesla to move on. Secondly, Tesla needs a marketing program, equivalent to any other major company like Apple, and they need to spend money, and they need to be aggressive.”
While Gerber agrees with Denholm on Musk’s leadership prowess, he said the board always has the billionaire’s best interest in mind.
“There is no Tesla board in my mind,” Gerber said. “The Tesla board is like the five fingers of Elon, you know, so essentially, nobody represents Tesla shareholders. They all represent Elon, and there is no Tesla board essentially. Because what he says goes and they all live in fear of Elon.”
Musk’s compensation package was originally laid out in 2018 and required Tesla to meet ambitious targets for Musk to earn stock options. Each achievement of these targets would grant Musk stock equal to 1% of Tesla’s outstanding shares at the time.
By 2023, Tesla claimed it had met all 12 milestones.
However, since the package was struck down, Musk suggested he might divert more attention away from Tesla to focus on his other ventures.
In a January post on X, Musk expressed discomfort with expanding Tesla’s AI and robotics efforts without having 25% control of the company’s votes. He currently holds about 13%.
Musk has been at the helm of Tesla for the past 16 years, taking over as CEO in 2008 when the company was on the brink of bankruptcy. Since then, he has transformed it into the world’s leading electric vehicle company, now valued at $569 billion.
Musk’s fortune is valued at $203 billion, making him the world’s third wealthiest person.
