Tesla (TSLA) shareholders are currently voting on CEO Elon Musk’s staggering executive pay package valued at $46 billion, based on the EV maker’s current stock price. The California Public Employees’ Retirement System (CalPers), which holds 9.2 million Tesla shares, disclosed it will vote against Musk’s compensation package.
Yahoo Finance Legal Reporter Alexis Keenan explains what Tesla shareholders have to gain from approving the pay package — a major incentive in keeping Musk on as CEO — and the reasons why shareholders would vote it down.
Yahoo Finance shared a poll at the start of the trading week, asking whether Tesla shareholders should approve Musk’s pay package. Well over 400,000 respondents have participated in the poll, 96% of which voted “No.”
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This post was written by Luke Carberry Mogan.
Follow along with Yahoo Finance’s coverage of Musk’s pay package saga:
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Video Transcript
Tesla shareholders voting on Ceo Elon Musk controversial pay pags.
You will get the results tomorrow afternoon.
Moments ago, Ks by the way announced he had voted against it.
Yahoo Finance Alexis Keenan here discussed some of the pros and cons that shareholders are weighing Alexis.
Yeah, so kind of a mixed bag or getting from a variety of influential shareholders.
So it’s still kind of a wait and see even though Elon Musk had teased us a little bit in that tweet or ex post saying that 90% of the retail shareholders that have voted so far wanted a yes for his pay deal.
So let’s kind of talk through the things that might be weighing on shareholders mind for the pay package against the pay package.
One big one, of course, incentivize Musk to stay as Ceo of Tesla.
Um There’s arguments of course, uh for many years that he is essential to the company that his, he is synonym with Tesla that he needs to be there in order for the company to be successful long term, also maybe avoiding a lawsuit from Elon Musk.
Now, I don’t know what nature that lawsuit might take, but if he’s not paid, lawyers will think of something electric, they’re creative, they’ll think of something.
And he has not been paid since 2018, since this is uh all performance based package.
So one could make the argument.
Perhaps we’ve got to be paid something.
We don’t know what that would look like in the future if this is turned down.
Uh Also looking back to 2018, the deal did get 73% of independent shareholder support back then.
So you could say that’s a relatively high number, even if you don’t like the way that the board processed the deal and served it up to shareholders.
And finally, uh on the the side for the argument for pay, uh avoiding maybe a stock price decline, there have been plenty of analysts that uh say if you don’t vote for it, that Tesla’s stock is going to suffer well and it already has suffered.
Of course, it’s already gone.
Ok.
So give us the other side, the other side, a no pay vote in favor of that theory.
Uh avoiding, let’s say shareholder litigation.
You could make the case that either way this vote goes, that shareholders are, some shareholders are not going to be happy.
They could say that there’s harm to the company’s value if it loses the 40 to 50 billion plus that it might have to pay Elon Musk if this deal is a yes.
Also maybe just punishing the board of directors for their approach to analyzing the pay deal.
The revote is recommend recommended by a one member compensation committee.
So, you know, that’s not necessarily a ton of detail though the company holds out that they did put this rigorous analysis to come up with this redo this copycat version of the 2018 deal.
Also preventing Musk from increasing his control of Tesla.
This would give him another approximately 12% of the company and he has said that he wants that at least 25% control in order to continue as he has been in the past and finally just, uh, diluting company assets.
That’s been one argument out there from some proxy advisers saying that, uh, they don’t want those assets to go toward Elon Musk or at least, maybe not in that volume.
Yeah.
All right.
Thank you, Alexis.
We wait and see.
