Mixed Reactions from 3 Tesla Shareholders: From Reluctant Approval to Firm Rejection of Musk's Pay

Tesla Shareholders Consider Reinstatement of Musk's Record Pay Package

Today, Tesla shareholders face a pivotal decision at their annual meeting: whether to reinstate Elon Musk's substantial pay package after a Delaware judge nullified the previous one. Opinions are split, with early investor Ibrahim AlHusseini stating, "I'm voting yes unenthusiastically, out of principle," emphasizing that Tesla should honor the original 2018 agreement since Musk met its milestones.

AlHusseini, who invested in Tesla during a Series C funding round in 2006 and steadily sold off most of his shares over the next decade, believes many institutional investors will vote against the package. However, retail investors, who hold about 40% of Tesla stock, may tilt the vote as Musk claims that "roughly 90% of retail shareholders who have voted" support the compensation plan.

The pay package, initially valued at up to $56 billion, now stands at approximately $46 billion due to a decline in Tesla's market capitalization. If reinstated, Musk's stake in the company would increase from 12.9% to 22.4%. Prominent institutional shareholders such as BlackRock, Vanguard, State Street, Geode Capital, and Capital Research control 17% of the vote but have not disclosed their stances. Conversely, Baron Capital, Altimeter, and Ark Invest have declared their support, while Norges Bank Investment Management, Glass Lewis, Institutional Shareholder Services, California Public Employees' Retirement System, and California State Teachers' Retirement System oppose the package, deeming it excessive.

Institutional Voices and Criticisms

Ross Gerber, co-founder of Gerber Kawasaki, voted in favor of the pay package in 2018 but plans to vote against it this time. He argues that CEO compensation should be more aligned with actual company performance rather than stock price alone. Gerber criticizes the Tesla board for being conflicted and ineffective, calling it "the most incapable board of directors in the history of business."

New York City comptroller Brad Lander, responsible for overseeing the city's public pension funds, is also voting against the plan. Lander's office, which controls 3.4 million Tesla shares, has expressed ongoing concerns since 2018, noting that two independent board members left due to their inability to meet obligations. Lander insists, "You just can't let a distracted billionaire make up his own rules."

Support from Tesla's Board

Despite the criticisms, Tesla chairperson Robyn Denholm has urged shareholders to vote in favor of the package, arguing it will keep Musk focused on the automaker. Musk's other ventures, including stakes in X, SpaceX, Neuralink, and the Boring Company, have raised concerns about his divided attention. AlHusseini pointed out recent setbacks like the underwhelming performance of Cybertrucks and unsold cars, attributing Tesla's current stock price of around $170 to retail investor optimism about long-term prospects in robotics and AI.

Upcoming Vote

The shareholder meeting's outcome will reveal the influence of Musk's loyal base and long-term confidence in Tesla’s future. While Musk assured in an overnight tweet that the measure has sufficient support, some like Lander argue that the vote counting process lacks transparency, highlighting perceived failures in Tesla's corporate governance. As Tesla's shares have plummeted over 30% this year due to declining margins and car sales, the results from today's vote will be telling about shareholder sentiment and the company's trajectory.