Tesla's annual meeting could redefine the company's future as investors vote on Elon Musk's record breaking $1 Trillion compensation package [Image by Gaadiwaadi.com]
(The Post News) – Tesla will have the most important shareholder meeting in its history this Thursday, November 6, where investors will be voting on the $1 trillion compensation package proposed by its chief executive officer, Elon Musk, among other proposals that would change the course for the company.
The electric vehicle giant faces growing scrutiny of Musk’s leadership, his spending on AI projects, and Tesla’s shifting political image. The stock price has rebounded after a slow summer, but Tesla’s sales continue to be under pressure amid widespread doubts from many shareholders about whether Musk’s personal empire-spanning Tesla, SpaceX, xAI and X-has become too intertwined.
A Billion Dollar Gamble on Musk’s Vision
Tesla’s board maintains that the huge pay package is needed to keep Musk motivated and committed. Chair Robyn Denholm warned shareholders last month that Musk might leave if they reject the package. She urged them to reaffirm their confidence in his leadership and his goal to make Tesla “the world’s most valuable company.”
The proposal replaces Musk’s 2018 $56 billion deal, which a Delaware judge twice knocked down as too beholden to Musk. Tesla is appealing that decision but, for now, Musk receives no formal compensation from the car maker.
Musk will have to hit ambitious milestones to unlock the full $1 trillion. In Tesla’s latest filings with the SEC, he must increase Tesla’s market capitalization to $8.5 trillion by 2035, sell 12 million vehicles a year, and deploy one million robotaxis and one million AI-powered humanoid bots. If he succeeds, Musk’s ownership stake could increase from about 13% to 25%.
The deal has divided the investment community. Proxy advisers ISS and Glass Lewis both recommended that shareholders vote against the package, which they described as “excessive” and said would concentrate too much power in Mr Musk’s hands.
Tesla’s sixth-biggest outside investor, Norges Bank Investment Management of Norway, announced in a release Tuesday that it would vote against the pay plan and against two members of Tesla’s compensation committee in a follow-up to Maryland State Retirement & Pension System, Baltimore.
“While we appreciate Musk’s role, this award is too large and it raises key person risk.”
But analysts said Musk was likely to win due to Tesla’s legion of retail investors, or ordinary shareholders, who have supported him for years. Several US-based asset managers, including Schwab Asset Management and Baron Capital, have also come out in his support, saying Musk’s incentives are aligned with long-term shareholder objectives.
Shareholders will also vote on a proposal to permit Tesla to invest in xAI, Musk’s private AI venture that recently absorbed X. The startup-which is valued at close to $80 billion-develops the Grok chatbot and has pulled in billions in funding from Musk’s other companies, including SpaceX.
Critics say the move could further entrench conflicts of interest. “Musk is using public resources to fund his private empire,” said Kevin Thomas, chief executive of the Shareholder Association for Research and Education. “Tesla shouldn’t become a piggy bank for xAI.”
Tesla’s board has rejected most such accountability-and-sustainability proposals, but several remain on the ballot for Thursday. One, filed by New York State Comptroller Thomas DiNapoli, would repeal Tesla’s 3 per cent ownership threshold for filing derivative lawsuits. “By moving its state of incorporation to Texas, Tesla is stripping shareholder rights,” said DiNapoli.
Another proposal seeks to have Tesla link sustainability metrics to executive compensation and investigate its supply chain for child labour. The board recommends opposition to all three.
A Referendum on Leadership
In recent weeks, Tesla has mounted an all-out campaign to rally supporters. On its site, VoteTesla.com, videos of board members praising Musk run as triumphant music swells in the background.
Musk, meanwhile, has taken to X in an attempt to sway retail investors and said the outcome could “affect the future of civilization.” Some investors, however, want Tesla to refocus on its core mission. “It’s surreal that a company struggling to sell cars is advertising a CEO’s pay package,” said Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management. “Tesla needs to get back to building EVs.”
Analysts say the meeting is a turning point. “This is not just a compensation vote,” said Dorothy Lund, a professor at Columbia Law School. “It’s a referendum on Elon Musk’s control over Tesla.” Whether investors decide to increase oversight or double down on Musk’s vision, one thing is clear: Thursday’s decision could define Tesla’s future, and the future of its mercurial CEO.
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