Benzinga - by Shanthi Rexaline, Benzinga Editor.
Tesla, Inc.’s (NASDAQ:TSLA) annual shareholder meeting is just a day away, and the biggest question mark isn’t about the company’s future – it’s about CEO Elon Musk‘s. Shareholders will decide the fate of his controversial compensation plan, a decision that could lift a cloud over Tesla’s stock… or send it spiraling.
What’s At Stake: Back in January, a Delaware court threw a wrench into Musk’s original pay package, which awarded him stock options tied to Tesla’s performance, after a shareholder lawsuit.
Now, Tesla is pushing shareholders to ratify the pay plan. But there’s a twist: Musk has hinted that a rejection could lead to him scaling back his involvement with the company, potentially spooking investors.
Team Musk Rallies: In a full-court press, several Tesla executives have taken to social media to champion Musk’s pay plan.
- Tom Zhu, Senior Vice President (Automotive) and the mastermind behind Tesla’s China success story, praised Musk’s “wisdom, courage, and decisiveness” as crucial to achieving Tesla’s ambitious vision. “Our shareholders are surely aware of how extraordinary our journey has been. If you look forward to realizing Tesla’s grand vision with us, please give Elon and the Tesla team your full trust by taking 5 minutes to vote,” he said.
- Troy Jones, Vice President of Sales & Service, highlighted how Musk defied early naysayers and delivered massive shareholder value. Musk “took the challenge head on, disrupting multiple legacy industries, producing self-driving electric vehicles at scale, and creating massive value for shareholders in the process,” he said.
- Ashok Ellusamy, Director of Autopilot Software, argued that Musk’s leadership is the key driver of Tesla’s advancements in artificial intelligence. “It is his combination of deep technical understanding, insane perseverance and relentless hard work that have positioned Tesla to be a leader in real-world AI,” he said. “We need Elon Musk to push the frontier, because he sees it already.”
Similarly, Todd Maron, Tesla’s ex-general counsel who helped draft the initial plan, calls it “the most shareholder-friendly pay package ever conceived.”
Analyst Predictions: Analysts are divided on the vote’s outcome and its potential impact on Tesla’s stock price.
- Bernstein analyst Toni Sacconaghi predicts a potential 5% stock-price drop if the plan fails, citing the recommendations of proxy advisory firms like ISS and Glass Lewis against it. These firms advise large investors on voting decisions.
- Altimeter Capital CEO Brad Gerstner, on the other hand, believes the hefty pay is justified given Musk’s past performance, especially during Tesla’s early, resource-strapped days. “Nobody else I know in business would have accepted an all-performance pay package for a company that CNBC was reporting was on the verge of bankruptcy,” he said. “Pay the man his due. He works his butt off. He's the most innovative CEO we have in America.”
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