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Musk’s $1 trillion salary package and his investment in xAI will be discussed at Tesla’s shareholders meeting.
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The meeting comes after a year of political wrangling and sales struggles for Tesla.
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Tesla’s board of directors has recommended against shareholder proposals regarding increased liability.
Tesla is facing a very important situation shareholder meeting.
On November 6, the electric vehicle maker will hold its annual meeting, where investors will vote on issues related to the future direction of the company and the performance of CEO Elon Musk.
The meeting took place at a time when the company had a year full of political controversies and sales woes. Tesla’s board also decided to exclude at least 11 people. shareholder proposals Focusing on responsibility and sustainability
Although Tesla shares have largely recovered from losses suffered between March and August and the end of the EV tax credit boosted third-quarter vehicle sales, many investors have questions about Musk’s leadership and the company’s spending on artificial intelligence.
From Musk’s proposed $1 trillion pay package to his xAI investment, here’s what’s at stake for Tesla and Musk at Thursday’s shareholder meeting.
Tesla did not immediately respond to a request for comment.
The fight over Musk’s record-breaking $1 trillion pay package has turned into one of the riskiest corporate showdowns in recent years.
Tesla’s seat, Robyn DenholmHe warned shareholders in a letter in October that Musk could leave the company if they did not approve the plan at Tesla’s annual meeting next week. In his letter, Denholm said it depends on whether shareholders still want to “keep Elon on as Tesla’s CEO and motivate him to make Tesla the leading provider of autonomous solutions and the most valuable company in the world.”
The proposed pay package, potentially worth up to $1 trillion over the next decade, was introduced after a Delaware judge rejected Musk’s earlier ruling. 56 billion dollars in compensation plan twice. The judge wrote in the decision that the Tesla board of directors was unduly influenced by Musk when approving the 2018 agreement. biggest executive salary award in institutional history. Musk was left without compensation while Tesla continued to appeal the judge’s decision.
To unlock full payment, Musk must hit a series of ambitious milestones. Goals include increasing Tesla’s market capitalization to $8.5 trillion by 2035, selling 12 million vehicles annually, deploying one million robotaxis and producing one million “AI bots,” according to Tesla’s filings with the Securities and Exchange Commission. If he is successful, his stake in the company will increase from 13% to at least 25%.
The proposed payment package is a matter of debate among investors. Proxy advisory firms ISS and Glass Lewis urged shareholders to reject the offer, arguing that it gave Musk excessive power with little oversight. Meanwhile, Musk responded by calling out to companies.corporate terrorists“During Tesla’s third-quarter earnings call.
“It bothers me to build a robot army here and then get fired for some stupid advice,” Musk said.
As Tesla moves deeper into robotics and artificial intelligence, Musk wants shareholders to agree to invest in his artificial intelligence startup xAI.
Musk had previously commented about X that if it were up to him, Tesla “would have invested in xAI a long time ago.”
Founded in July 2023, xAI has quickly become one of Musk’s most valuable ventures. The company, which developed the Grok chatbot integrated into X, has raised over $12 billion across multiple funding rounds and is valued at approximately $50 billion by 2024.
In March, Musk announced: xAI had acquired X In an all-stock deal, xAI was valued at $80 billion and X was valued at $33 billion. Musk’s rocket companySpaceX also announced plans to invest $2 billion in xAI earlier in the year.
Musk owns Tesla, SpaceX, Neuralink, and The Boring Company, and many have referred to his related ventures as “Muskonomy.” Some shareholders have previously told Business Insider they are concerned about the interconnectedness of their ventures.
“Musk already has major conflicts of interest related to his roles at other companies like xAI,” Kevin Thomas, CEO of the Research and Education Shareholders Association, told Business Insider.
“If this were a merger decision, we would at least be looking at a single asset,” Thomas added. “But allowing a CEO to use a publicly traded company as a piggy bank to obtain cash, talent and chips for their private company is not something the board or shareholders should condone.”
Although Tesla’s board rejected many shareholder proposals regarding accountability, several came up for a vote, according to the meeting agenda filed with the Securities and Exchange Commission:
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Evaluating the feasibility of integrating sustainability metrics into senior executive compensation plans,
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To publish an audit on child labor,
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Amending the statute and removing the 3% shareholding limit required for filing derivative lawsuits,
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To elect each director annually.
Tesla’s board of directors recommended against all liability proposals.
The proposed statute change limiting derivative suits to the largest shareholders was introduced by New York State Comptroller Thomas P. DiNapoli.
“Tesla deceived shareholders by guaranteeing that shareholder rights would remain the same after the company moved to Texas, but then promptly and unilaterally took away those rights,” DiNapoli previously told Business Insider when his office filed the offer in July. “These actions violate fundamental principles of good corporate governance and must be reversed.”
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