June 18, 2024

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The former Tesla board member says he will not vote for Musk's $56 billion pay package

The former Tesla board member says he will not vote for Musk's $56 billion pay package

The former chairman of Tesla's audit committee and a prominent investor in the clean-tech venture said he will not support Elon Musk's $56 billion pay package, and he understands why other investors will vote against the CEO's pay proposal next week.

“Look, Elon has done a phenomenal job. He's built one of the most transformative companies of this era. But to ask for a $55 billion pay raise at the exact time you've missed quarterly numbers, slowed growth, and laid off 15% of the workforce.” “It is, to say the least, arrogant.”

This is according to Steve Westley, who spoke on CNBC on Thursday. He served on Tesla's board of directors from 2007 to 2010 and is the former Comptroller and CFO of the State of California. Westley has served on the boards of the state's two largest pension funds, CalSTRS and CalPERS, which invest more than $500 billion.

The reality is that “a huge number of pension funds in the world,” including those in California, “are likely to vote no,” Westley said, adding that next week will be “big drama, and everyone will be watching.” “

Tesla shareholders are set to decide on a high-stakes vote on Musk's pay package, which is worth $56 billion at the highest level. In January, a judge overturned his compensation Due to governance concerns, Tesla's board of directors is asking shareholders to ratify it again at the 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.

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Tesla's investor base consists of a mix of large institutional investors including Vanguard Group, which owns 7.2%, and Blackrock, which owns 5.9%. According to Tesla's 2024 shareholder report. Musk also owns a significant stake in the company as well as an army of small individual investors that Tesla has been courting with announcements and events. Investors have taken to posting on social media when they vote on their shares and offering advice to others on how to ensure they vote in time for the meeting. Other major investors have publicly sided with Musk.

long time Tesla bull Cathie Wood, Published Thursday on X “No other executive aligns with shareholders like Musk.” Wood wrote that, based on the salary package that will be voted on next week, Musk will have worked without pay since 2018. Wood, founder, CEO and chief investment officer of Ark Investment Management, said existing shareholders would also benefit from another five or more years with Musk's leadership of Tesla.

“How can shareholders walk away from their pay package after Elon and the shareholders have already taken on the risks associated with Tesla's rise to and defeat the world's best-selling car? Unscrupulous!” Wood wrote.

However, there are other investors who are firmly in Westley's camp. Profitability and growth slowed due to Tesla's meteoric rise between 2018 and 2021, the Westly Group founder said. Additionally, shareholders are concerned about the company's ability to deliver a low-cost Tesla with full self-driving capability.

“The facts on the ground have changed, and I think that's why we're likely to see shareholders come back with a completely different perspective,” Westley said.

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Regarding whether or not Musk will stay at the electric car maker if the proposal fails to gain majority support, Westley said it is unclear.

“If you had asked me a year or two ago if Elon would leave Tesla, I would have said not in a million years,” he said. “Now, that possibility is a little more ambiguous, we'll see.”

Tesla did not immediately respond to a request for comment.

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