On Thursday, Tesla shareholders will vote on whether or not to approve Musk's uniquely structured pay package. Initially passed in 2018, Tesla's board of directors and shareholders praised the pay proposal because it was seen as a major success, requiring Musk to do so. Almost impossible goals Before he sees any reward. But six years later, after achieving those goals, a judge overturned the pay, and Tesla's board of directors was accused of mismanagement.
The size of the pay package, combined with Musk's status as a prominent entrepreneur and celebrity CEO, has turned what should have been a monotonous bit of corporate governance into an international news story. Musk's harshest critics see the record pay as a sign of an executive with significant influence on Tesla's board, which includes his brother and friends. On the other hand, supporters credit Musk with building the company from the ground up, and say that objections to his salary are now being raised only because he succeeded in reaching all the incentives set for him.
For now, the fate of Musk's compensation package remains up in the air. High-profile supporters, including the likes Baron Capital He endorsed ARK Invest CEO Cathie Wood, a longtime Musk supporter. The Norwegian sovereign wealth fund Norges Bank Investment Management, pension fund managers in New York and California, and investment firm Gerber Kawasaki intend to vote no. Remaining on the sidelines are major asset management companies such as Vanguard Group, BlackRock, and State Street Corp., which… Not announced publicly How they vote however – because of their size – could be the deciding factor. Add many more wrinkles Small investors Which collectively own 43% of Tesla common stock. Saturday is caught He said on X 90% of individual shareholders who actually voted supported the compensation plan.
Some management experts disagree. The promise of superhuman pay helped drive some of Musk's erratic behavior, according to J. Bradford DeLong, a professor of economic history at the University of California, Berkeley. “I think that salary package helped his descent from a visionary business leader to an outlandish carnival barker,” DeLonge said. books In an editorial for The New York Times. “This set of stimuli and responses should not be validated.”
Is high pay good management?
Musk's pay package was originally approved in 2018 when 73% of shareholders They voted for the plan. At one point, the plan was worth $56 billion, but its value has since dropped to its current value of $45 billion, with Tesla stock falling. After Musk achieved his goals, a group of disgruntled shareholders filed a lawsuit to block the move in a Delaware court. Kathleen McCormick, the judge in the case, ruled to void the pay plan, stating that the board was not sufficiently independent.
This is an opinion agreed upon by some shareholders. “Tesla's board acts like a family-owned company when it's a publicly traded company,” says New York City Comptroller Brad Lander. Tell CNBC.
Gerber Kawasaki CEO Ross Gerber, who has called Musk an “absentee CEO” and said Tesla needs a “real CEO,” said Elon deserved compensation but criticized the board for what he saw as poor behavior. “Frankly, the board sucks,” Gerber told CNBC. “They just stink. I've never seen such a bad board. It'll be written about in business schools for years to come for what a terrible board Tesla has.”
Tesla Chairman Robin Denholm said it was “absolute BS” and that it was not independent of Musk, as McCormick suggested.
Other contributors criticized Musk himself. A persistent sore point for corporate innovators, both those who praise Musk as a visionary and those who dislike his personal politics, is his perceived lack of focus. Musk is often criticized for dividing his attention between his various other companies, which include X, SpaceX, and The Boring Company. In an interview with luck Last month. Lander said the board allowed Musk to focus on his other companies. “Every other major publicly traded company that has a truly independent board — and many of them are not independent of the board — expect their CEO to be the full-time CEO of their company,” Lander said.
Chris Aylman, chief investment officer at CalSTRS, a retirement fund in California, said Musk is juggling “a million balls in the air” and should only focus on a few of them. Musk's best interest, according to Ellman, is space travel, which is currently being explored at SpaceX.
“He wants to go to Mars,” Ailman said, half-jokingly. “Let him fly away.”
