Tesla’s former audit committee chairman and a prominent clean-tech venture capitalist says he won’t support Elon Musk’s $56 billion compensation package and understands why other investors will vote against the CEO next week Salary Proposal.
“Look, Elon has done a great job; he’s built one of the most transformative companies of our time. But when you’re missing quarterly numbers, growth is slowing, and you’ve laid off 15% of your workforce, ask A $55 billion pay raise is arrogant to say the least.
That’s according to Steve Westly, who spoke on CNBC on Thursday. He served as a member of Tesla’s board of directors from 2007 to 2010 and served as California’s chief financial officer and treasurer. Westley has served on the boards of CalSTRS and CalPERS, two of the state’s largest retirement funds, with more than $500 billion in investments.
The fact is, “a lot of pension funds around the world,” including those in California, “will most likely vote no,” Westley said, adding, “Next week is going to be a big drama and everyone will be paying attention.”
Tesla shareholders will vote heavily on Musk’s compensation package, which is worth up to $56 billion. A judge revoked his pay in January due to governance issues, and Tesla’s board is asking shareholders to approve it for a second time at next week’s annual shareholder meeting. The board also asked investors to support moving the company’s registration from Delaware to Texas, where Tesla is headquartered.
According to Tesla’s 2024 shareholder report, Tesla’s investor base consists of large institutional investors, including Vanguard Group, which holds 7.2%, and Berrock, which holds 5.9%. Musk holds a sizable stake in the company in addition to a smaller group of retail investors that Tesla has been attracting through ads and events. Investors post on social media as they vote and offer advice to others on how to ensure they vote at the meeting in a timely manner. Other large, high-profile investors have also publicly backed Musk.
Cathie Wood, a long-time Tesla bull, posted on X on Thursday that “no other executive is as aligned with shareholders as Musk.” Sker will have been working without pay since 2018. Wood, founder, CEO and chief investment officer of Ark Investment Management, said current shareholders will also benefit from Musk’s five years or more of leading Tesla.
“How can shareholders renege on Elon’s compensation package after he and shareholders have assumed and overcome the risks posed by Tesla’s emergence as the world’s best-selling car maker? Unconscionable!” Wood wrote.
Other investors, however, are firmly in the Westley camp. The Westly Group founder said profitability and growth have slowed due to Tesla’s rapid rise from 2018 to 2021. Pull cars and fully autonomous driving capabilities.
“The reality on the ground has changed, and I think that’s why you may see shareholders come back with a very different view,” Westley said.
As for whether Musk would stay at the electric car maker if the proposal fails to win majority support, Westley said it’s unclear.
“If you had asked me a year or two ago whether Elon would leave Tesla, I would have said not in a million years,” he said. “Right now, the outlook is a little bit murky – we’ll see.”
Tesla did not immediately respond to a request for comment.
