The stunning $56 billion remuneration deal for Tesla CEO Elon Musk will be up for reconsideration on June 13th, following its disapproval by a Delaware judge in the beginning of the year. Despite the fact that over two thirds of stakeholders gave the nod to Musk’s compensation plan back in 2018, Judge Kathaleen McCormick voiced strong criticisms against the Tesla governing body, severely dubbing them as spineless minions of a domineering overlord.
It gives rise to speculation whether the stakeholders casted their votes in favour of a proposition they were convinced would never come to fruition. Did any of them seriously envision that Tesla, then valued at $50 billion in March of 2018, would surpass the market valuation cap of $650 billion needed for Musk to obtain his total bonus?
Despite the debate, Musk’s has his fervent supporters, including the prestigious Baillie Gifford’s Scottish Mortgage Investment Trust, one of Tesla’s most notable investors. However, stakeholders in the trust may beg to differ with the trust’s market value plummeting by 25% in the last three years.
Proxy consulting firm Glass Lewis has projected that the implementation of Musk’s compensation plan would lead to the formation of an additional 304 million shares, equal to a 9 per cent dilution for current stakeholders. Thus, stakeholders who nod at the CEO’s payment plan appear to be setting themselves up for downfall.
A opposing perspective suggests that striking down the proposal might jeopardize Musk’s commitment to Tesla, particularly since he has previously expressed intentions to develop AI technologies beyond the company if his stakes aren’t increased. Nevertheless, with Musk’s xAI successfully amassing $6 billion to compete with OpenAI, a whopping $56 billion payout might not necessarily ensure his undivided attention to Tesla over his personal AI projects.