June 23, 2024

Tesla’s board of directors is continuing its full-throttle support of CEO Elon Musk and, more specifically, his pay package that was once valued at $56 billion.

In a letter to shareholders Wednesday, board chair Robyn Denholm reiterated her support for Musk and said she wanted to put an end to the speculation of “naysayers.” Voting to approve the re-ratification of Musk’s 2018 compensation package — which was struck down by a Delaware judge in January — and reincorporation in Texas are about “fairness, respect, and the future of Tesla,” she said.

Tesla in 2018 decided on a compensation package that would give Musk the right to purchase up to 304 million shares at a price of $23.34 as long as he met a series of milestones. Despite the difficulty of achieving the goals, Tesla had met enough of them by the end of 2022 for Musk to receive the full package.

But now, after the package has been rendered invalid by the courts, Musk has received no compensation from Tesla for his recent work. Not only is it not fair, his supporters argue, but it removes any incentive for Musk to stay committed to Tesla.

“When we made our commitment to Elon in 2018 — a commitment that was overwhelmingly approved by approximately 73% of disinterested stockholders — it had one simple purpose: to keep Elon focused on Tesla and motivated to achieve the Company’s incomparable ambitions,” Denholm wrote.

“This is obviously not about the money,” Denholm adds in the letter, noting Musk’s enormous wealth. “Motivating someone like Elon requires something different.”

Musk’s net worth stands at $208.2 billion, making him the second richest individual in the world, according to Forbes. Much of that wealth comes from his ownership of Tesla stock, as well as his roles at several other ventures, like SpaceX or Neuralink.

During an interview with CNBC Thursday, Denholm said the “world is better for the ecosystem of Elon,” adding that the board makes sure that things that are “in and around the company” from Musk’s other ventures are fair to shareholders.

Musk was hit with a barrage of criticism earlier this week after it was reported that he had diverted artificial intelligence chips from Nvidia meant for Tesla to benefit his xAI and X Corp. Despite denying the report and calling its author a liar, Musk admitted that Tesla lacked space to send the chips to, adding that they would have otherwise collected dust in a warehouse.

Tesla has engaged in a retail politics-inspired blitz to advocate for the package ahead of the June 13 annual meeting, purchasing advertisements and launching a dedicated website promoting the board’s recommendations. Musk has been actively promoting voting on X, formerly Twitter, while Denholm has been reaching out to larger institutional investors to secure support.

Several prominent investors, including billionaire and Tesla bull Ron Baron, have thrown their weight behind Musk. Others, ranging from California and New York City government funds to proxy advisors Glass Lewis and Institutional Shareholder Services, have expressed opposition their opposition.

New York City Comptroller Brad Lander, who represents funds that hold 3.4 million shares in Tesla, on Tuesday said the company needs a “full-time CEO” focused on growing the company and not “chasing shiny new objects.” The head of the California pension system CalPERS, which owns 9.5 million shares, has called Musk’s compensation not “commensurate with the performance” of Tesla.

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