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Tesla's $46 Billion Pay for Musk's Future · Elon Musk Podcast

• 0:01
  Hey everybody, welcome back to the Elon Musk podcast.
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  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 CEO Elon Musk's $46 billion
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  stock options package faces a critical vote at the company's
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  annual shareholder meeting. Investors are deeply divided,
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  with some arguing that the compensation is excessive and
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  indicative of poor governance, while others, particularly small
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  retail shareholders, have already expressed their support
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  for Musk. Now, at a recent meeting of
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  Tesla investors, including New York City Comptroller Brad
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  Lander, arguments were made against ratifying Musk's 2018
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  pay package again. Lander, whose office manages
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  $271 billion in assets across five New York City retirement
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  funds, criticized the Tesla board for failing to provide
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  independent governments for shareholders now.
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  Lander noted that the NYC retirement funds hold 3.4
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  billion Tesla shares valued at approximately $672 million.
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  He declared that the funds would vote against Musk's pay and the
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  re election of board members. Kimball Musk, who's Elon Musk's
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  brother, and James Murdoch, citing conflicts of interest.
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  Now, this vote is not a referendum on Elon Musk as CEO.
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  He is a visionary whose role in Tesla has been critical.
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  But independent shareholder governance must ensure
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  reasonable pay package. This pay package is not
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  reasonable, they said now. Tesla did not immediately
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  respond to requests for comments.
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  The company's compensation package for Musk was nullified
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  in January by a Delaware Chancery Court judge, who cited
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  the lack of independence in the board's process and improper
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  negotiation of the deal. Now, following the ruling, Musk
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  announced plans to relocate Tesla's headquarters from
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  Delaware to Texas, aiming for more favorable judicial
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  treatment. The Tesla board is now asking
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  investors to reapprove Musk's pay and the move to Texas, and
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  shareholder advisory firms Glass Lewis and Institutional
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  Shareholder Services have recommended voting against the
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  pay package. Lander argued that Tesla lacks a
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  full time CEO focused solely on the EV makers growth.
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  He criticized Musk for being distracted by ventures like
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  social media and other companies including XXAI, SpaceX,
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  Neuralink and the Boring Company.
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  Ivan Frischberg, chief sustainability officer of
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  Amalgamated Bank, echoed these concerns, noting Musk's
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  distractions and significant challenges for Tesla, including
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  global competition, development delays and labor disputes.
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  Frischberg mentioned that 2 corporate directors resigned,
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  citing board reference to Elon Musk at Frisburg's bank, whose
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  clients hold 600,000. Tesla shares plans to vote
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  against the re election of Kimball, Musk and Murdoch due to
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  the lack of board independence. Lander warned that Musk's pay
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  issues could have broader impacts on capital markets.
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  Emphasizing the need for independent oversight, Lander
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  said when billionaires are allowed to flout the rules,
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  normal people suffer. The billionaire can't have his
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  brother and friends decide on governance rules.
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  Lander expressed frustration at not being able to get a response
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  from the Tesla board, describing Musk's pay package as
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  outrageously large and insufficiently governed.
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  Now, Maryland Comptroller Brooke Lierman added her concerns about
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  Tesla's workforce management and the board's inattention to human
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  capital, presenting these as risks for shareholders to
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  consider them voting. She said to succeed, Tesla needs
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  a management team that is on the ball, urging for an effective
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  board that can stand up to the CEO when necessary.
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  Contrastingly, major investor Ron Baron, founder of Baron
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  Capital, supports Musk's pay package, emphasizes Musk
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  critical role in Tesla's success over the years.
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  Baron highlighted Musk's relentless Dr. and commitment,
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  including sleeping on the factory floor during difficult
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  production periods. In 2018, Tesla's compensation
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  package granted Musk the option to purchase 304,000,000 shares
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  at $23.34 each, contingent on meeting challenging milestones.
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  Nearly 75% of shareholders initially approved this package.
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  Despite achieving all of the milestones, the Delaware court
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  invalidated the package due to the flawed approval process.
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  Tesla is now seeking a re ratification of the package and
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  approval for moving its incorporation to Texas ahead of
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  the annual meeting on June 13th. Now the proposed compensation,
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  potentially the largest for AUS executive, was worth $56 billion
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  at its peak and is currently valued at $46 billion.
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  And several funds represented by Lander will vote against it,
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  along with the re election of Kimble, Musk and Murdoch, of
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  course. And Musk has been lobbying
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  shareholders through social media, factory tours and by
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  attacking critics of his pay package.
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  Proxy firms like Glass Lewis and Institutional Shareholder
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  Services have recommended voting against it, citing the excessive
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  size and dilution of shareholder value.
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  Now miss Musk's aggressive push for the compensation package.
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  Tesla faces declining sales, increased competition and
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  internal challenges, including layoffs and aging vehicle
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  models. Musk argues he needs a
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  significant stake to drive Tesla's future in AI and
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  robotics, and his demands for greater control, coupled with
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  threats to spin out Tesla's AI work if his demands aren't met,
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  have heightened the stakes. And despite shareholder
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  concerns, Musk's influence remains strong, particularly
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  among retail investors. The stock is heavily held by
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  retail investors, comprising 44% of his total shares, the highest
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  among the top ten S&P 500 companies.
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  This demographic has shown strong support for Musk,
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  influenced by his public appeals and promises of continued value
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  creation. Now, Tesla is rallying support
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  through its website, votetesla.com, urging
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  shareholders to recognize the value that Musk has created and
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  vote in favor of the compensation package.
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  Early voting indicates significant support for Musk
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  among retail shareholders. However, regardless of the June
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  13th vote outcome, the compensation issue is far from
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  over. Shareholders will vote, but any
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  decision will likely serve as evidence in ongoing legal
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  proceedings, which could extend for months now.
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  Tesla reassured a Delaware judge that despite the proposed move
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  to Texas, the company will continue to litigate the
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  compensation case in Delaware. Meanwhile, shareholder lawsuits
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  alleging insider trading and fiduciary breaches by Musk and
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  the board are emerging. And as Tesla's annual meeting
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  approaches, the debate over Musk's compensation package and
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  corporate governance continues. Shareholders face crucial
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  decisions that will impact the company's direction and
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  governance structure, and the upcoming vote will reveal the
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  extent of shareholder support for Musk's leadership and
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  compensation. While some advocate for tighter
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  governance in a full time CEO, others believe Musk's unique
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  drive and vision are irreplaceable now.
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  The contentious issue underscores the broader
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  challenges facing Tesla right now, from internal management to
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  external competition. And as the vote draws near, the
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  company's future hinges on the balance between governance and
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  Elon Musk's visionary leadership.
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  Hey, thank you so much for listening today.
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  I really do appreciate your support.
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  If you could take a second and hit the subscribe or the follow
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  button on whatever podcast platform that you're listening
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  on right now, I greatly appreciate it.
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  It helps out the show tremendously, and you'll never
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  miss an episode. And each episode is about 10
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  minutes or less to get you caught up quickly.
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  And please, if you want to support the show even more, go
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  to patreon.com/stage Zero. And please take care of
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  yourselves and each other, and I'll see you tomorrow.