Musk Demands More Control Over Tesla

"Tesla Chief Executive Elon Musk has gone public with a demand for another big pay package, saying he wants more shares and greater control over the electric-car company as it expands further into robotics and artificial intelligence.

On Monday, Musk gave board members what amounts to an ultimatum, saying he feels uncomfortable making Tesla a leader in those two areas without controlling around 25% of the company.

"Unless that is the case, I would prefer to build products outside of Tesla," Musk wrote on the social-media platform X.

The billionaire currently owns about 13% of Tesla, according to FactSet, making him the company's largest shareholder. If he were to exercise all vested options, his stake would rise to about 20.6%, according to the company's 2023 proxy filing.

Musk's social-media comments come after he reduced his stake in Tesla by selling more than $39 billion of the car maker's stock in 2021 and 2022, at least partly to help pay for his purchase of X, then known as Twitter.

Tesla shares closed up less than 0.5% Tuesday. The company didn't respond to a request for comment.

Some investors have long been excited about Tesla's work and plans for deploying AI with driverless cars and humanoid robots. Such initiatives have helped underpin Tesla's lofty market valuation and are a part of the company's longer-term growth strategy.

"Simply look at the delta between what Tesla does and GM," Musk wrote on Monday, describing Tesla as a collection of a dozen startups.

Tesla is the world's most valuable automaker, with a market valuation of nearly $700 billion. GM is valued at around $48 billion.

In 2022, Musk showed off a prototype of a humanoid robot at a Tesla event, part of his efforts to shape the public perception of the company as more than just an electric-vehicle maker.

The Tesla chief also revealed last summer the car company plans to spend more than $1 billion through the end of 2024 on a supercomputer, dubbed Dojo, that is to help develop driverless-car technology.

Musk has described Dojo as giving Tesla an advantage over rivals looking to train autonomous-car systems by employing enhanced computing power to get it done faster. Dojo was developed especially to handle the large amount of video generated by a driverless car.

Musk has also separately launched an AI company while calling the technology one of the biggest threats to humanity.

The unexpected ouster of OpenAI Chief Executive Sam Altman late last year stoked anxiety in Silicon Valley about the risks of founders losing control over their companies. Though Altman was quickly reinstated, the topic has been an area of particular concern for Musk ever since he was pushed out as CEO of his digital-payments startup now known as PayPal.

Tesla has taken an unusual approach to compensating its CEO. Musk doesn't earn a salary from the carmaker. Instead, he is paid in stock options that vest based on certain corporate performance metrics. Investors approved his latest pay package in 2018.

In 2022, Tesla cleared the final hurdle required for that pay plan to fully vest. The package is worth roughly $59 billion at recent share prices.

Musk in another post Monday said he hasn't received a new compensation plan because Tesla's board is waiting for a verdict in litigation over his 2018 package.

"I should note that the Tesla board is great," he wrote. Musk added that from his standpoint, the question of his compensation is about "ensuring the right amount of voting influence at Tesla."

A Tesla shareholder is seeking to nullify Musk's latest pay deal, alleging the CEO was too involved in determining his own pay and claiming the board failed to disclose crucial information to shareholders.

Tesla representatives have argued Musk didn't dictate the terms of the grant.

Some on Wall Street have been worried about Musk's level of commitment to the carmaker following his purchase of Twitter, as well as the prospect of further diluting Tesla shareholders to pay him.

"[W]e are unsure whether Mr. Musk would in fact leave Tesla if not provided with his requested package -- but still we view the events negatively," J.P. Morgan analysts wrote in a note to investors Tuesday.

Musk also said Monday on X that he would support implementing a dual-class voting structure to give him greater control over the automaker, but expressed doubt over the feasibility of implementing one at this stage. In the past, Musk has criticized companies, such as Ford Motor and Facebook, now Meta, for having multiple classes of shares, giving certain stockholders more influence." [1]

1. Musk Demands More Control Over Tesla. Elliott, Rebecca; Orru, Mauro.  Wall Street Journal, Eastern edition; New York, N.Y.. 17 Jan 2024: B.1.