The former chairman of Tesla’s audit committee and a prominent clean-tech venture capitalist says he won’t support Elon Musk’s $56 billion pay package and he understands why others Investors will vote against the CEO compensation proposal next week.
“Look, Elon has done an extraordinary job; he built one of the transformational companies of the time. But asking for a $55 billion pay raise at the exact time when you missed quarterly numbers, growth is slowing, and you’ve laid off 15% of the workforce is hubris to me. That’s the least we can say. »
This is according to Steve Westly, who spoke on CNBC on Thursday. He served on Tesla’s board of directors from 2007 to 2010 and is a former comptroller and chief financial officer for the state of California. Westly has served on the boards of the state’s two largest pension funds, CalSTRS and CalPERS, which invest more than $500 billion.
The truth is that “a very large number of pension funds around the world,” including those in California, “are very likely to vote no,” Westly said, adding that it will be “a drama next week and everyone will watch. »
Tesla shareholders are set to decide on a high-stakes vote on Musk’s pay package, valued at up to $56 billion. A judge canceled his compensation in January Due to governance issues, Tesla’s board is asking shareholders to ratify it a second time at its annual shareholder meeting next week. The board also asked investors to support moving the company’s state of incorporation from Delaware to Texas, where Tesla is headquartered.
Tesla’s investor base is a mix of large institutional investors, including The Avant-garde Group, which holds 7.2%, and Blackrock, which holds 5.9%, according to Tesla’s 2024 shareholder report. Musk also has a significant stake in the company, in addition to an army of small retail investors who Tesla woos with ads and events. Investors have taken to posting on social media when they vote for their stocks and giving advice to others on how to ensure they vote in time for the meeting. Other large, high-profile investors have publicly sided with Elon Musk.
Cathie Wood, long-time Tesla bull, posted Thursday X that “no other leader is as aligned with shareholders as Musk.” Based on the pay package up for a vote next week, Musk will have worked without pay since 2018, Wood wrote. Existing shareholders will also benefit from five or more additional years with Musk at the helm of Tesla, said Wood, founder, CEO and chief investment officer of Ark Investment Management.
“How can shareholders give up their compensation AFTER Elon and shareholders have already taken and overcome the risks associated with Tesla’s rise to producing the world’s best-selling car? Unconsciously! » » Wood wrote.
Yet other investors are firmly in Westly’s camp. The Westly Group founder said profitability and growth have slowed following Tesla’s meteoric rise between 2018 and 2021. Additionally, shareholders are concerned about the company’s ability to deliver a Tesla vehicle at a lower cost. cost and fully autonomous driving capability.
“The facts on the ground have changed and I think that’s why you’ll probably see shareholders come back with a very different perspective,” Westly said.
As for whether or not Musk will stay with the electric vehicle maker if the proposal fails to gain majority support, Westly said it’s unclear.
“If you had asked me a year or two ago if Elon would leave Tesla, I would say not in a million years,” he said. “Now that outlook is a little murkier, we’ll see.”
Tesla did not immediately respond to a request for comment.
