This year’s annual Tesla (TSLA) shareholder meeting on Thursday 13th June is most probably going to be the most important one in the company’s history.
The significance of this meeting is ascribed to the announcement of the voting results of Elon Musk’s 2018 Performance Award. The pay package is estimated to be around $56 billion which needs the approval of both the company’s board of directors and its shareholders.
Tesla’s board of directors has already approved Elon Musk’s pay package which is in the form of Tesla (TSLA) shares that the CEO will be forbidden to sell for the next 5 years.
However, the real issue Elon Musk and Tesla are facing is the outside retail and institutional investors of the company. The massive number of these investors are extremely polarized on the issue. Some think that Elon Musk should get what he was promised back in 2018 but there is a group of investors who think this is an atrocious amount of money and no one including Musk should be paid this much.
Tesla created an entire website named votetesla.com to convince stockholders to vote in favor of Elon Musk and that the automaker should give him what he deserves.
Tesla released a few videos yesterday in which the company’s board members expressed their views on why they think Elon Musk should be given the promised compensation package.
One of these video messages was recorded by Tesla’s Chairman of the Boar Robyn Denholm. She thinks that in the long term, it’s in the favor of the company to honor the agreement made with Elon Musk in 2018.
As Elon Musk completed the ambitious goals set in the 2018 Performance Award agreement earlier than the set timeline, Robyn thinks he also should get the pay package before the previously set timeline. She explained why Musk should get his promised Tesla shares as:
More than 6 years ago in 2018, Tesla made a deal with Elon and you as shareholders approved that deal overwhelmingly. The targets outlined in the 2018 award were so ambitious that critics scoffed — and calling them impossible.
If he failed to achieve any of these targets, he would achieve nothing, he would absolutely have received no compensation. But Elon didn’t fail, he led Tesla to achieve those targets in half the allotted time — in roughly 5 years and his success is shared by all of you — the owners of the company.
Robyn Denholdm / Tesla (TSLA) Chair via votetesla.com / Q & A with Directors
Tesla Chair went on to explain how the Delaware Court blocked Elon Musk from getting his performance pay package which was already promised to him. A Tesla (TSLA) shareholder who owned only 9 shares of the company challenged Musk’s compensation plan in court and the court sided with him.
In light of the court’s decision, Tesla went into reviewing the compensation plan with the help of independent external counsel. This review committee also considered alternatives to the 2018 Performance Award.
“We formed an independent special committee which enlisted the help of independent outside counsel and advisors to thoroughly evaluate alternatives including the ratification of the 2018 Award,” Robyn Denholm said during her video message.
“The special committee recognized if [in] 2018 Award is not ratified then Tesla may need to negotiate a replacement compensation plan with Elon in order to motivate him to devote his time, energy, and efforts to Tesla,” she further stated.
Robyn Denholm didn’t go into detail about what the alternative payment plans would be if the majority of shareholders votes against Elon Musk. However, it’s worth noting that even if Musk loses the vote, the Tesla board will be working on alternative plans to compensate him as the CEO who placed Tesla where it is today.
According to one of Elon Musk’s X posts (above), so far, about 90% of Tesla (TSLA) retail shareholders have voted in favor of Elon Musk’s 2018 pay package and re-incorporating the company in Texas instead of Delaware.
As the company’s Chairman of the Board said in her video message above, it’s in the long-term interest of Tesla to be incorporated in a state that will help its mission and support the next phase of growth.
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