Palo Alto, California – A prominent clean technology venture investor and former audit committee chair at Tesla expressed his reluctance to support Elon Musk’s proposed $56 billion pay package. Steve Westly, who served on the Tesla board from 2007 to 2010 and holds a background as a former controller and chief financial officer of the state of California, believes that Musk’s request for a substantial pay increase comes at a questionable time.
Westly emphasized that while Musk has undoubtedly achieved remarkable success in transforming Tesla into a groundbreaking company, it is concerning to seek such a significant pay raise amidst challenges such as missed quarterly targets, a slowing growth rate, and recent layoffs. His skepticism is shared by various other investors, including many of the world’s pension funds, notably those in California.
The upcoming vote by Tesla shareholders on Musk’s $56 billion pay proposal holds significant weight, especially considering that a judge had previously rescinded his compensation in January due to governance concerns. The Tesla board is now seeking shareholder ratification for a second time during their upcoming annual meeting, which also includes a proposal to relocate the company’s state of incorporation from Delaware to Texas, where Tesla is headquartered.
Among Tesla’s investor base are large institutional investors such as The Vanguard Group and Blackrock, alongside Musk himself holding a substantial stake. Despite some investors publicly siding with Musk, there is a growing sentiment of caution among shareholders, primarily driven by concerns over Tesla’s profitability, growth trajectory, and the delivery of promised products like a lower-cost vehicle and full self-driving capability.
As the controversy surrounding Musk’s pay package unfolds, supporters like longtime Tesla bull Cathie Wood have voiced their unwavering support for the CEO, citing his alignment with shareholders and the potential long-term benefits for current stakeholders. In contrast, critics like Westly argue that the evolving landscape of Tesla’s performance and market dynamics warrant a reassessment of Musk’s compensation package.
With the shareholder vote approaching, the uncertainty looms over Musk’s future at Tesla in the event that the proposal fails to secure majority support. While Musk’s commitment to Tesla has been steadfast in the past, changing circumstances within the company and the industry as a whole raise questions about his continued leadership in the face of investor scrutiny.
Amidst the scrutiny and speculation, Tesla remained silent on the matter, refraining from immediate comment on the unfolding debate over Musk’s compensation. Subscribe to the Eye on AI newsletter for the latest updates on how AI is reshaping the business landscape.