Key Points
- Tesla’s annual meeting will feature a vote on CEO Elon Musk’s new compensation package, potentially worth up to $1 trillion.
- Norway’s sovereign wealth fund and proxy advisors Glass Lewis and ISS oppose the deal, calling it excessive and dilutive.
- The package would give Musk around 25% ownership of Tesla, which he says he needs to feel secure in his leadership role.
- Investors will also vote on re-electing board members and a proposal for Tesla to invest in Musk’s other company, xAI.
Tesla investors are gearing up for a big day: the company’s annual meeting in Austin, Texas, is set for Thursday. Even before it starts, sparks are already flying, especially over CEO Elon Musk’s new, massive compensation package.
One major point of contention: Norway’s $1.9 trillion sovereign wealth fund, which owns a 1.2% stake in Tesla, announced it will vote against Musk’s new pay deal, a package that could potentially be worth a staggering $1 trillion. The fund expressed concerns about the “total size of the award, dilution, and lack of mitigation of key person risk.”
Musk’s pay package will be the main event on Thursday, but investors will also vote on other proposals, including the re-election of directors and potential investments by Tesla.
The Trillion-Dollar Package
This is, of course, the big one. Last month, Musk made a direct plea to shareholders, urging them to approve his new pay package. He argued he wouldn’t feel comfortable leading the company without more control, especially as he plans to build “an enormous robot army.”
Musk currently owns a 13% stake in Tesla. His 2018 pay package is still tied up in a lawsuit in Delaware. The new proposed package, which could be worth up to $1 trillion, would grant Musk 12 large blocks of stock options tied to what the board calls “aggressive” targets. If approved, it would give Musk around 25% ownership of Tesla, which he says is enough to have “influence.”
The pro-Musk camp, including Tesla chair Robyn Denholm, argues that keeping Musk at Tesla and giving him this level of control is good for the company. Denholm even warned that Musk might step down from his executive role if the package isn’t approved.
However, some shareholder advocates and independent proxy advisors, such as Glass Lewis and ISS, oppose it. They argue the award is excessive, will dilute the value for other shareholders, and was not created by an impartial board.
Other Key Votes
Besides Musk’s pay, several board members who designed the package are up for re-election. Some of these directors have also faced criticism and lawsuits for their own “excessive” compensation.
Another hot topic is Musk’s focus. He leads not just Tesla but also SpaceX, The Boring Company, Neuralink, and his AI startup, xAI. With xAI’s Grok chatbot now in new Tesla vehicles, investors are questioning whether the two companies should have a more formal partnership. Musk has suggested that Tesla invest in xAI would be a good idea, and now shareholders will vote on whether to make that investment.
Thursday’s meeting promises to be a very interesting one to watch.
