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Elon Musk Vs. Tesla Shareholders · Elon Musk Podcast

• 0:01
  Hey everybody, welcome back to the Elon Musk Podcast.
• 0:05
  This is a show where we discuss the critical crossroads, the
• 0:08
  Shape, SpaceX, Tesla X, The Boring Company, and Neuralink.
• 0:13
  I'm your host Will Walden, Tesla's 8th largest shareholder.
• 0:18
  Norway's $1.7 trillion sovereign wealth fund announced on
• 0:22
  Saturday that it will vote against ratifying Elon Musk's
• 0:26
  $56 billion pay package. The decision is part of a
• 0:29
  broader shareholder vote scheduled for next week.
• 0:33
  Now. The Norwegian fund, which holds
• 0:34
  a .98% stake in Tesla valued at $7.7 billion, has been a vocal
• 0:40
  critic of excessive CEO compensation.
• 0:44
  Now, Norwich Bank Investment Management, or NBIM, which
• 0:47
  manages the fund, acknowledges the significant value created
• 0:50
  under Musk's leadership since 2018, but expressed concerns
• 0:54
  about the pay packages, total size, the structure dilution and
• 0:58
  the lack of mitigation of key person risk, they said.
• 1:01
  We will continue to see constructive dialogue with Tesla
• 1:04
  on this and other topics. Additionally, the fund plans to
• 1:08
  support a shareholder proposal urging Tesla to adopt a policy
• 1:12
  of freedom of association and collective bargaining, signaling
• 1:16
  support for labor unions seeking influence over the automaker.
• 1:20
  Now, the original pay package approved in 2018 was invalidated
• 1:24
  early this year by a Delaware judge who deemed the amount
• 1:27
  unfair to shareholders. Judge Kathleen McCormick of the
• 1:31
  Delaware Court of Chancery described the compensation as an
• 1:35
  unfathomable sum and criticized Tesla's board for failing to
• 1:39
  disclose adequately the close relationships between the
• 1:41
  approving directors and Musk. Now the package, reportedly the
• 1:45
  largest ever for ACEO of a publicly traded company, came
• 1:49
  under scrutiny for its excessive size and the ease with which
• 1:52
  Tesla could achieve the performance benchmarks tied to
• 1:55
  Musk's compensation. The Norwegian sovereign wealth
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  fund also voted against the package in 2018 and has
• 2:02
  consistently opposed high CEO pay packages that do not align
• 2:06
  with long term shareholder value.
• 2:09
  Now, if approved, Musk's compensation would remain the
• 2:11
  largest for a chief executive in the United States.
• 2:14
  Now, Tesla's board of directors has urged shareholders to
• 2:17
  reaffirm the package, which includes no salary or cash
• 2:20
  bonus, but offer stock options contingent on Tesla's market
• 2:23
  value rising to $650 billion / 10 years from 2018.
• 2:29
  Tesla is currently valued at approximately $571.6 billion.
• 2:35
  Now, in a recent interview with Financial Times, Tesla board
• 2:39
  chair Robin Denholm defended the package, stating that Musk's
• 2:42
  deserves the pay due to the company's impressive revenue and
• 2:45
  stock price targets being met. However, proxy advisory firm
• 2:50
  Glass Lewis has advised shareholders to reject the
• 2:52
  package, citing its excessive size and the potential negative
• 2:56
  impact of Musk exercising his stock options.
• 2:59
  Glenn Lewis also highlighted Musk's numerous other ventures,
• 3:02
  which includes serving as chief technology officer and executive
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  chairman at X or Twitter, CEO of SpaceX, founder of Neurolink and
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  the Boring Company, and CEO of artificial intelligence firm
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  XAI. These roles, the firm argued,
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  could detract from his focus on Tesla.
• 3:20
  Musk has been Tesla's CEO since 2008 and has played a crucial
• 3:24
  role in transforming the company into the most valuable automaker
• 3:27
  by market capitalization. Under his leadership, Tesla
• 3:31
  reversed a $2.2 billion loss in 2018 to achieve a $15 billion
• 3:35
  profit and increase vehicle production sevenfold, according
• 3:39
  to the Vote Tesla campaign. And despite Tesla's
• 3:42
  accomplishments, the company is facing some challenges,
• 3:45
  including a decline in sales volume reported in the first
• 3:49
  quarter of this year, the first such decline in nearly four
• 3:52
  years. This decline comes amid waning
• 3:54
  consumer interest in EVs, and as the vote approaches, Musk and
• 3:59
  his supporters, including Robin Denholm, are working to persuade
• 4:03
  shareholders to reauthorize the 2018 P package.
• 4:06
  The main argument centers around the premise that the original
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  deal should be honored, billionaire investor Ron Barron
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  said on CNBC. We said as Tesla as a company,
• 4:17
  Elon, if you perform, this is what you're going to get.
• 4:20
  How can you go back and renege on that, especially when all of
• 4:24
  the directors and all the shareholders approved it?
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  It's crazy. Similarly, investor Kathy Wood
• 4:29
  took to Twitter, expressing how can shareholders renege on his
• 4:32
  pay package after Elon and shareholders already have taken
• 4:35
  and overcome the risks associated with Tesla's rise to
• 4:38
  producing the top selling car in the world.
• 4:40
  However, not all influential voices are in favor.
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  Marcy Frost, head of the California Public Employees
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  Retirement System, stated the pension manager would vote
• 4:49
  against the package, deeming it not commensurate with Tesla's
• 4:54
  performance. Musk responded by accusing
• 4:56
  CalPERS of breaking the deal, stating shame on them, they have
• 5:00
  no honor and beyond. Tesla Musket faced criticism of
• 5:04
  legal battles over his management practices at Twitter
• 5:07
  and other ventures. After acquiring Twitter in 2022,
• 5:10
  Musk fired senior leaders, depriving them of severance
• 5:13
  payments intended to stabilize the company during the
• 5:16
  transition. And these former Twitter execs,
• 5:19
  including Prague Grawell, have since sued Musk, claiming he has
• 5:24
  failed to honor financial commitments, and the lawsuit
• 5:27
  condemns. Under Musk's control, Twitter
• 5:29
  has become a scofflaw, stifling employees, landlords, vendors
• 5:35
  and others. And Musk's approach to financial
• 5:37
  commitments has also been controversial.
• 5:39
  In March, a Silicon Valley bakery complained about a
• 5:42
  canceled Tesla order for 4000 pies, to which Musk responded by
• 5:46
  promising to resolve the issue. And he wanted to make sure
• 5:49
  everything was right and dependable.
• 5:51
  Historical disputes over employee composition at Tesla
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  further complicate Musk's narrative. 2009 Tesla Co founder
• 5:58
  sued the company after being pushed out in denied stock
• 6:00
  options. More recently, Jerome Jalen left
• 6:04
  Tesla in 2021 under contentious circumstances regarded unvested
• 6:08
  shares. Now, despite the issues, Musk
• 6:11
  has significantly contributed Tesla's success, achieving
• 6:14
  milestones that seemed improbable to outsiders.
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  However, as the vote nears, the question remains whether
• 6:20
  shareholders will uphold the pay package or deem it excessive in
• 6:24
  light of Musk's other commitments and the company's
• 6:26
  challenges. Hey, thank you so much for
• 6:34
  listening today. I really do appreciate your
• 6:36
  support. If you could take a second and
• 6:37
  hit the subscribe or the follow button on whatever podcast
• 6:40
  platform that you're listening on right now, I greatly
• 6:43
  appreciate it. It helps out the show
• 6:45
  tremendously and you'll never miss an episode.
• 6:48
  And each episode is about 10 minutes or less to get you
• 6:51
  caught up quickly. And please, if you want to
• 6:54
  support the show even more, go to patreon.com/stage Zero.
• 7:00
  And please take care of yourselves and each other, and
• 7:02
  I'll see you tomorrow.