Shareholders of Tesla ( TSLA ) are answering a $56 billion question today at their annual meeting: Should Elon Musk’s record salary be reinstated after a Delaware judge struck down a previous pay package?
“I vote yes without motivation; I am voting yes on principle,” early investor Ibrahim AlHusseini told Yahoo Finance. Personal feelings aside, he said Tesla should respect the 2018 package that was thrown out.
“That was the agreement. Elon has achieved the milestones, so he should get his compensation.
AlHusseini, founder of venture capital firm FullCycle, invested in the electric vehicle company in a Series C funding round in 2006. AlHusseini said he steadily sold most of his position in the decade that followed.
“We pushed the stock through a trillion-dollar valuation. A lot of wealth has been created and his reward has been set by the board,” AlHusseini added, although he believes most of his colleagues will vote no this time.
But private investors currently own about 40% of Tesla stock, and Musk claims they support his pay. Over the weekend, the billionaire posted on
“When I see Elon trying to stoke retail enthusiasm via Twitter, I personally think it’s inappropriate for a company worth half a trillion dollars,” AlHusseini said.
The compensation package, consisting of options, was originally valued at $56 billion, but is now worth about $46 billion due to a decline in Tesla’s market capitalization. Musk, who currently owns 12.9% of Tesla, will have a 22.4% stake if the package is reinstated.
Top institutional shareholders BlackRock (BLK), Vanguard, State Street (STT), Geode Capital and Capital Research, which together control 17% of the votes, have not publicly announced their decision.
However, Baron Capital, Altimeter and Ark Invest have said they will vote in favor.
On the other hand, Norges Bank Investment Management, Glass Lewis, Institutional Shareholder Services, California Public Employees’ Retirement System and California State Teachers’ Retirement System have said the proposed amount qualifies as overcompensation.
Ross Gerber, co-founder of investment company Gerber Kawasaki, voted yes in 2018, but this time he chooses no.
“I think CEOs should get much more compensation based on the actual performance of the company, not just the stock price,” Gerber told Yahoo Finance. “That is the problem. Elon has every incentive to pump up the stock price, but now that performance has faltered, he has no longer had that problem.”
Gerber started investing in Tesla in 2014 and his company owns 332,000 shares as of March 31.
“For a legitimate business operation, I believe Tesla’s board of directors is the most contradictory, least independent and most incapable board of directors in corporate history,” Gerber said. “There is no board of directors that has done a greater disservice to a company. And this pay package is an example of that negligence.”
New York City Comptroller Brad Lander, whose office oversees the city’s public pension funds, is voting against the plan. Earlier this month, Lander wrote an open letter calling on other shareholders to also reject the pay package.
“We have been raising our concerns since 2018 and it has only gotten worse. Two independent board members have left the board because they were unable to meet their obligations,” Lander told Yahoo Finance. “You just can’t let a distracted billionaire make up his own rules.”
The city’s pension fund owns 3.4 million Tesla shares.
In a letter sent to shareholders earlier this month, Tesla Chairman Robyn Denholm implored investors to support the pay package, saying it will encourage Musk to remain focused on the automaker. Musk also has stakes in X, SpaceX, Neuralink and The Boring Company.
“He has been spending more time on his side projects,” AlHusseini said. “Cybertrucks have failed. There are 50,000 cars sitting unsold at Tesla. The only reason the stock is still around $170 is because retail investors are hoping for a long-term robotic AI that can save the company.”
The shareholders’ meeting will take place on Thursday afternoon. In 2018, Tesla’s board approved Musk’s pay package with a 73% vote.
In a tweet, Musk said the measure had the support needed to pass.
“That is not how the votes should be counted and made public,” Lander said. “Some shareholders are still voting ahead of the meeting. It’s just further evidence of the failure of corporate governance at Tesla.”
Tesla shares are down more than 30% this year due to declining margins and car sales. The voting results of mid-market and retail investors will reveal the strength of Musk’s cult and what shareholders think of the long-term prospects for Tesla.
Yasmin Khorram is a senior reporter at Yahoo Finance. Follow Yasmin on Twitter/X @YasminKhorram and further LinkedIn. Send newsworthy tips to Yasmin: yasmin.khorram@yahooinc.com
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