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

The former chairman of Tesla’s audit committee and a prominent cleantech venture capitalist said he would not support Elon Musk’s $56 billion pay package and understands why other investors will vote against the CEO’s pay proposal the next week.

“Look, Elon has done an extraordinary job; He has built one of the transformative companies of the time. But calling for a $55 billion wage increase precisely at a time when quarterly numbers have been missed, growth is slowing, and 15% of the workforce has been laid off is, I would say, arrogance, to say the least. least. “

That’s according to Steve Westly, who spoke on CNBC on Thursday. He served on Tesla’s board of directors from 2007 to 2010 and was comptroller and chief financial officer for 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 “a lot of the world’s pension funds,” including those in California, “are very likely to vote no,” Westly said, adding that next week there will be “a lot of drama and everyone will be watching.” . “

Tesla shareholders will decide a high-stakes vote on Musk’s pay package, valued at $56 billion at its highest level. In January, a judge rescinded her compensation due to governance concerns, and Tesla’s board is asking shareholders to ratify it for a second time at its annual shareholder meeting next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 has a sizable stake in the company, plus an army of smaller retail investors that Tesla has been courting with announcements and events. Investors have begun posting on social media when they vote their shares and offering advice to others on how to make sure they vote in time for the meeting. Other prominent big investors have publicly sided with Musk.

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

“How can shareholders renege on their pay package AFTER Elon and shareholders have already assumed and overcome the risks associated with Tesla’s rise to producing the best-selling car in the world? Unconsciously! Wood wrote.

However, other investors are firmly on Westly’s side. The founder of Westly Group 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 offer a lower-cost, fully capable Tesla vehicle. autonomous driving.

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

As to whether or not Musk will remain at the electric vehicle maker if the proposal fails to win majority support, Westly said it was unclear.

“If you had asked me a year or two ago if Elon would leave Tesla, I would say not in a million years,” he said. “Now, that perspective is a little more confusing; we’ll see.”

Tesla did not immediately respond to a request for comment.

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