The Tesla board is pushing shareholders to approve a $56 billion payout for Elon Musk and suggesting that he’ll jump ship if he doesn’t get his money.”Fairness and respect require that we honor the collective commitment we made to Elon — a commitment that was, and fundamentally still is, about retaining Elon’s attention and motivating him to focus on achieving astonishing growth for our company,” Tesla board chair Robyn Denholm wrote in a Monday letter to shareholders. Musk and the Tesla board of directors worked out the compensation package back in 2018, but in January, a Delaware judge ruled that the deal was null and avoid because the board “misleadingly omitted details about the process.” The board is now trying again by adding the package to a group of proposals shareholders will vote on at a June 13 meeting.According to Denholm, this isn’t about the money but rather keeping Musk happy. “If Tesla is to retain Elon’s attention and motivate him to continue to devote his time, energy, ambition and vision to deliver comparable results in the future, we must stand by our deal,” she writes.”We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018,” Denholm adds. “Elon is not a typical executive, and Tesla is not a typical company.”According to Denholm, Musk has “driven exceptional growth” and delivered “hundreds of billions of dollars of value” to shareholders. But Tesla has had a rough 2024 so far. In Q1, Tesla produced 433,371 vehicles and delivered 386,810 globally, an 8.5% drop from Q1 2023 and the first time the EV maker reported a year-over-year decline in quarterly deliveries since 2020.It also laid off 10% of its staff in April, and Musk made the puzzling decision to let go of Tesla’s entire Supercharger team. (He later rehired some of those team members.)
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We’ll have to wait until June 13 to see if Denholm is persuasive. Some of Tesla’s investors may also be more inclined to let Musk walk. A year ago, a group that holds $1.5 billion in shares argued that Musk has been “overcommitted at a time when the company faces critical challenges” and urged Tesla to rein Musk in and even suggested a CEO succession plan.As for Musk, the initial decision on his compensation prompted multiple tweets lashing out at the state of Delaware and encouraging people not to do business there. Reuters reports that Tesla also doesn’t want to pay the lawyers who handled that losing case their entire fee.
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