The battle over Elon Musk's Tesla comp package heats up
Is Musk's Tesla Pay Stirring Corporate Revolt?
The debate over Elon Musk's compensation package at Tesla is intensifying, with major advisory firm Glass Lewis advising shareholders to vote against it, mirroring their stance from 2018. Shareholders are also reconsidering the location of Tesla's incorporation, moving from Delaware to Texas, which is viewed as potentially more favorable for Musk. Despite legal uncertainties and the lack of automatic invalidation of a previous court decision against the package, Tesla is actively campaigning for shareholder support.
Musk's supporters are employing aggressive tactics to sway the vote, including threats that Musk might restrict his involvement in Tesla's AI development unless he maintains significant control. This comes as Musk's new AI venture, xAI, secures substantial funding, raising concerns about his commitment to Tesla. The situation highlights ongoing governance issues at Tesla, with critics arguing for stronger leadership structures to counterbalance Musk's influence.
What tactics are Elon Musk's supporters using to influence the shareholders' vote on his compensation package?
Elon Musk's supporters are using various tactics to influence the shareholders' vote on his compensation package. Some of these tactics include creating how-to videos on voting, posting online content to sway opinions, and making a website to garner support. They are also reaching out to potential swing voters one-on-one, similar to an election for public office. Additionally, some supporters are using scare tactics, suggesting that if Musk doesn't get his way, he may leave Tesla or go after Tesla's AI efforts through his newly-funded startup, xAI.
What are the two main proposals that Tesla's board is trying to get approved by shareholders?
The two main proposals that Tesla's board is trying to get approved by shareholders are:
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A new vote on Elon Musk's 2018 CEO compensation package: This package, worth around $56 billion, was rescinded by a Delaware judge earlier this year. Tesla's board is asking shareholders to reinstate the package, arguing that it was originally approved by a majority of shareholders in 2018 and has driven the company's growth and stockholder value.
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Moving Tesla's state of incorporation to Texas: Tesla's board is also asking shareholders to vote in favor of moving the company's incorporation from Delaware to Texas4. This proposal is closely related to the compensation package, as Tesla's board and Musk have blamed the lawsuit that invalidated the package on the fact that it happened in Delaware. They believe that moving the company's incorporation to Texas, where Tesla has been headquartered since December 2021, would provide a more favorable legal environment for the company and Musk.