Skip to main content

Tesla Investors Battle Over Elon Musk's $46 Billion Compensation Plan

A significant debate is brewing among Tesla Inc. (TSLA) shareholders over CEO Elon Musk's monumental $46 billion stock-option compensation plan. 

Leading the charge against the package is a coalition of investors, including the New York City pension funds, who argue that Musk’s divided attention among his various ventures leaves Tesla without a dedicated full-time CEO.

Elon Musk Tesla shares, best stocks to buy, learn a trade

The Call to Reject
On Monday, New York City Comptroller Brad Lander, representing the city’s funds with $260 billion in assets, filed a notice urging shareholders to vote against Musk’s pay package at Tesla’s upcoming June 13 meeting. The investors contend that Tesla’s board is excessively deferential to Musk, failing to address his commitment issues as he juggles multiple roles at companies like SpaceX, Neuralink, and X (formerly Twitter).

The letter highlighted that Musk’s attention is often fragmented, with him dedicating specific days to different companies. This dispersion of focus, they argue, has led to Musk poaching top talent from Tesla for his other ventures, notably engineers from Tesla's AI and autonomy team for his new company, xAI.

The Retail Investor Divide
The clash sets the stage for a showdown between institutional investors and retail investors who staunchly support Musk. Retail investors view Musk as a visionary whose leadership is crucial for Tesla's future. Since April 29, Tesla has been actively campaigning for Musk’s pay package, sending 11 updates to shareholders about Musk’s tweets and updates on their dedicated voting website, “Protecting Your Investment and Tesla’s Future.”

Concerns Over Financial Risks
The dissenting investors also raised concerns about Musk’s financial practices, noting that he has pledged a portion of his 20% Tesla stake as collateral for loans. They warn that if Musk were forced to sell this pledged stock, it could trigger a significant drop in Tesla’s stock price, harming shareholders.

Additionally, the investors criticize the Tesla board for allowing Musk to use Tesla resources for his other businesses. Musk has previously acknowledged using Tesla engineers for X-related tasks, claiming no board member had objected.
Board's Defense

The Tesla board, however, stands by Musk’s compensation plan. In a video on Tesla's shareholder voting website, independent board chair Robyn Denholm defended the package, noting that it was designed with extraordinarily ambitious targets that Musk has successfully met. Denholm pointed out that Musk’s achievements have dramatically increased Tesla’s revenues and profitability.

Financial Performance and Future Plans
Despite the internal turmoil, Tesla’s stock performance reflects investor optimism, rising 6.7% to $186.60 recently, buoyed by positive updates on its electric semitruck program. At the Advanced Clean Transportation Expo, Tesla executive Dan Priestley announced that the Tesla Semi would begin production-spec deliveries by 2026. The truck, currently in pilot testing with PepsiCo’s Frito-Lay division, promises impressive capabilities, including a range of up to 500 miles and the ability to travel over 1,000 miles in 24 hours thanks to rapid charging technology.

Broader Market Context
Tesla's stock movement is also influenced by broader market dynamics, including developments in China’s electric vehicle market. Positive earnings from Chinese EV maker XPeng (XPEV) have provided a lift to Tesla shares, contrasting with the recent struggles of competitor Li Auto (LI), which reported disappointing earnings and guidance.

Upcoming Shareholder Vote
As the June 13 shareholder meeting approaches, the outcome of the vote on Musk’s pay package remains uncertain. The dissident investors are also seeking to withhold support from Musk’s brother, Kimbal Musk, and former 21st Century Fox CEO James Murdoch, both of whom are deemed insufficiently independent by the opposition.

This contentious vote will not only decide the future of Musk's compensation but also signal the degree of investor confidence in Tesla’s governance and strategic direction amidst Musk’s multifaceted commitments.


Considering a $1,000 investment in these companies? 

Our team at Stock Investor carefully curated a list of top stocks with the potential for significant returns, suitable for beginners and seasoned investors alike who are eager to learn a trade and unearth the best stocks to buy. Though not featured in this article, these selected stocks could be game-changers in the future.

For those seeking dynamic trading experiences, consider joining our Swing Trade AlertsOption Income Alert, or our Trading RoomTake advantage of our special offer today, starting at just $1 in the first month.

Unlock the secrets of Smart Money

Explore how billionaires and institutions are influencing the market. Follow their every move with DarkOption Flow and stay updated on essential market insights. Begin your journey to informed investing today!

Education

And if you're a fan of Invest opedia, you'll appreciate what we offer at SharperTrades even more. Explore our comprehensive option trading course and technical trading course, where you can learn trading, analyze stocks, delve into chart patterns for stocks, and gain invaluable insights for making the best company investments.

Unlock Your Stock Market Edge with SharperTrades. Dive into powerful trading tools, learn a trade, and receive expert guidance. Stay up-to-date with regular market updates. Learn trading, basics of investing, and how to pick the best stocks to buy. Whether you're a beginner or seasoned investor and trader, we've got you covered. Get started for free, today!



Trading Risk Disclaimer

​All the information shared is provided for educational purposes only. Any trades placed upon the reliance of SharperTrades, LLC, and/or DarkOption Flow are taken at your own risk for your own account. Past performance is no guarantee. While there is great potential for reward in trading stocks, cryptos, commodities, options, forex, and other trading securities, there is also a substantial risk of loss. All trading operations involve a high risk of losing your entire investment. You must therefore decide your own suitability to trade. Trading results can never be guaranteed. SharperTrades, LLC and DarkOption Flow are not registered as investment advisers with any federal or state regulatory agency. This is not an offer to buy or sell stocks, cryptos, forex, futures, options, commodity interests, or any other trading securities. SharperTrades, LLC and DarkOption Flow are not brokers and do not accept deposits. Purchases should not be considered deposits. The technical solution offered by the DarkOption Flow platforms is provided by a third party.

Popular posts from this blog

Google’s AI Struggles vs. Oracle’s Strategic Stability

Gap's Stylish Comeback: Stock Soars on Strong Earnings and Trendy Makeover

Dick's Sporting Goods Soars After Strong Q1 Performance and Upgraded Full-Year Outlook