Former Tesla board member says he wouldn’t vote for Musk’s $56 billion pay package

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The former chairman of Tesla’s audit committee and a prominent clean technology investor said he would 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 an extraordinary job; he built one of the transformational companies of the time. But to ask for a $55 billion raise just when you’ve missed quarterly earnings, growth is slowing and you’ve laid off 15% of the workforce is hubris, to say the least. ”

So says Steve Westly, who spoke on CNBC on Thursday. He served on Tesla’s board from 2007 to 2010 and is a former controller and chief financial officer of the state of California. Westly served on the boards of the state’s two largest pension funds, CalSTRS and CalPERS, which invest more than $500 billion.

The truth is that “an awfully large portion of the world’s pension funds,” including those in California, “are very likely to vote no,” Westly said, adding that next week will be “a big drama, and everyone will be watching.” . ”

Tesla shareholders will decide a high-stakes vote on Musk’s pay package, which at its highest value is valued at $56 billion. A judge revoked his damages in January due to governance issues and Tesla’s board is asking shareholders to ratify it a second time at the annual shareholder meeting next week. The board also asked investors to support a move of the company’s certificate of incorporation from Delaware to Texas, where Tesla is headquartered.

Tesla’s investor base is a mix of large institutional investors, including The Vanguard Group, which holds 7.2%, and Blackrock, which holds 5.9%. according to Tesla’s 2024 shareholder report. Musk also has a significant stake in the company, alongside an army of smaller private investors that Tesla is courting with advertising and events. Investors have started posting on social media when they vote their shares and offering advice to others on how to ensure they vote in time for the meeting. Other major prominent investors have publicly sided with Musk.

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Old Tesla bull Cathie Wood, posted on X on Thursday that “no other executive is as aligned with shareholders as Musk.” Based on the pay package voted on next week, Musk will have worked without pay since 2018, Wood wrote. Current shareholders will also benefit from another five or more years of Musk leading Tesla, said Wood, founder, CEO and chief investment officer of Ark Investment Management.

“How can shareholders give up his pay package AFTER Elon and the shareholders have already taken and overcome the risks associated with Tesla’s rise to producing the world’s best-selling car? Subconscious!” Wood wrote.

Still, other investors are firmly in Westly’s camp. The Westly Group founder said profitability and growth have slowed due to Tesla’s meteoric rise between 2018 and 2021. Additionally, shareholders are concerned about the company’s ability to deliver a cheaper Tesla vehicle and full self-driving capabilities to deliver.

“The facts on the ground have changed and I think that’s why you’re likely to see shareholders come back with a very different perspective,” Westly said.

As for whether or not Musk will stay with the EV maker if the proposal fails to win majority support, Westly said it was unclear.

“If you had asked me a year or two ago whether Elon would leave Tesla, I would have said not in a million years,” he said. “Now that outlook is a little murkier – we’ll see.”

Tesla did not immediately respond to a request for comment.

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