The former chairman of Tesla’s audit committee and a prominent clean-tech venture capitalist said he won’t support Elon Musk’s $56 billion pay package and understands why other investors will vote against the CEO’s pay proposal next week.
“Look, Elon has done an outstanding job; he built one of the transformational companies of his time. But asking for a $55 billion wage increase at a time when you’ve missed quarterly numbers, growth is slowing, and you’ve laid off 15% of the workforce is, I would say, arrogant, to say the least. »
This is according to Steve Westley, who appeared on CNBC on Thursday. He served on Tesla’s board of directors from 2007 to 2010 and is the former Comptroller and Chief Financial Officer for the State of California. Westley has served on the boards of two of the state’s largest pension funds, CalSTRS and CalPERS, which invest more than $500 billion.
The truth is that “very many of the world’s pension funds,” including those in California, “are very likely to vote against it,” Westley said, adding that next week it will be “high drama and everyone will be watching.” ” »
Tesla shareholders are set to vote on Musk’s pay package, which is valued at a maximum of $56 billion. In January, a judge overturned the compensation. due to governance issues, and Tesla’s board of directors is asking shareholders to ratify it a second time at its annual shareholders 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.
Tesla’s investor base is a mix of large institutional investors, including The 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, in addition to the army of small retail investors that Tesla attracts with advertising and events. Investors began posting on social media about voting their shares and giving others tips on how to vote in time for the meeting. Other large, well-known investors have publicly sided with Musk.
Cathie Wood, Tesla’s longtime bull, published Thursday on X that “no other executive is as connected to shareholders as Musk.” Based on the pay package that will be voted on next week, Musk will work without pay starting in 2018, Wood wrote. Current shareholders will also benefit from Musk leading Tesla for another five years or more, said Wood, founder, CEO and chief investment officer of Ark Investment Management.
“How can shareholders reject his compensation package AFTER Elon and shareholders have already accepted and overcome the risks associated with Tesla’s rise to producing the world’s best-selling car? Shameless! Wood wrote.
However, other investors are firmly behind Westley’s camp. The Westly Group founder said profitability and growth slowed due to Tesla’s rapid growth between 2018 and 2021. In addition, shareholders are concerned about the company’s ability to create a cheaper Tesla car and a fully self-driving car.
“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 view,” Westley said.
As for whether Musk will remain with the electric vehicle maker if the proposal doesn’t receive majority support, Westley said it’s 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 this prospect is a little cloudier – we’ll see.”
Tesla did not immediately respond to a request for comment.