Musk Pressures Tesla’s Board for
Another Massive Stock Award
Edwin Chan and Linda Lew
Tue, January 16, 2024 at 11:10 AM EST
(Bloomberg) — Elon Musk leaned on Tesla Inc.’s board to arrange another
massive stock award for him years after he sold a significant chunk of his
shares in the company to acquire Twitter.
In one of several posts on the topic, Musk wrote that unless he has roughly
25% voting control at Tesla, he’d prefer to build artificial intelligence and
robotics products elsewhere. While he remains the carmaker’s biggest
shareholder with an almost 13% stake, he sold almost $40 billion worth of
stock in 2022 to help fund his Twitter purchase.
Musk, 52, praised Tesla’s board in other posts and said directors were
waiting for a Delaware Chancery Court ruling before preparing another
compensation plan. Judge Kathaleen St. J. McCormick — who also
presided over Musk’s ill-fated attempt to get out of the Twitter deal — will
decide a case brought by a Tesla shareholder who alleges Tesla’s board
failed to exercise independence from Musk as it drew up his $55 billion
performance award in 2018.
“This is primarily about ensuring the right amount of voting influence at
Tesla,” Musk wrote in one of his posts on X.
Musk is pressuring Tesla’s board at an awkward time. The carmaker is off
to its worst start to any year as a public company, losing $94 billion in
market value as growth slows and profit margins shrink. The CEO also has
had to answer to a Wall Street Journal report on his drug use and concerns
this has elicited among executives and directors at his companies,
including at Tesla.
Tesla shares rose 0.7% as of 11 a.m. Tuesday in New York trading. At
$695.8 billion, the company’s market capitalization has risen more than 11fold since the board announced Musk’s pay award in January 2018. On the
other hand, its valuation peaked at more than $1.2 trillion before the Twitter
deal.
The combination of awards Tesla arranged for Musk in 2009, 2012 and
2018, and the value destruction caused by his Twitter acquisition resulted
in a dubious milestone a little more than a year ago. Musk became the first
person ever to erase $200 billion from their net worth.
His fortune recovered last year as Tesla shares doubled and Space
Exploration Technologies Corp.’s valuation soared. Musk reclaimed his
rank atop the Bloomberg Billionaires Index and is now worth an estimated
$206.1 billion, roughly 15% more than No. 2 Jeff Bezos.
Musk’s sudden claim that he’s uncomfortable growing Tesla to be a leader
in AI and robotics follows repeated boasts over the years that the company
was a leader in the fields. The carmaker offers products called Autopilot
and Full Self-Driving — both of which are driver-support features — and
has been developing a humanoid robot called Optimus.
The CEO also told analysts in July that he expected Tesla to spend more
than $1 billion over the next year on Project Dojo, an effort to make the
company a player in supercomputing for purposes including the
development of self-driving capability.
At Tesla’s inaugural AI Day in August 2021, Musk said he wanted to
demonstrate that the company was more than just an automaker and a
leader in real-world AI.
In July of last year, Musk announced the formation of xAI, a startup that
aims to rival Microsoft Corp.-backed OpenAI and Google’s DeepMind. A
week later, an analyst asked him during a Tesla earnings call whether the
new AI company would overlap with, compete with or enhance the value of
the carmaker’s AI efforts. He said the latter.
“What is Tesla? A car, energy, or AI company,” said Daniel Kollar, head of
consultancy Intralink’s automotive and mobility practice. “If it’s not an AI
company, then I don’t see an issue establishing a new company.”
“That said,” Kollar added, “I don’t see his behavior or choice of language
benefiting any of his companies now.”
https://finance.yahoo.com/news/elon-musk-pressures-tesla-board-102310777.html

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