Elon Musk’s Bold Move for Another Massive Payday from Tesla

Elon Musk's Bold Move for Another Massive Payday from Tesla

Elon Musk’s Bold Move for Another Massive Payday from Tesla: Elon Musk says he wants a much bigger share of Tesla than the one that made him the richest person in the world.

Elon Musk’s Bold Move for Another Massive Payday from Tesla

In several posts on X Monday night, Musk said that he wouldn’t want to help Tesla become a star in AI and robotics if he didn’t have a plan to get paid that would give him about 25% of the company’s stock. That would be about twice as much as the 13% stake he has now.

“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned,” Musk wrote in a post on X. “Unless that is the case, I would prefer to build products outside of Tesla.”

Musk had a stake of more than 20% in Tesla before he sold a lot of shares to buy X, the social media company he paid $44 billion for over a year ago.

Tesla is still the winner in electric cars, but other companies are closing the gap. Musk has said that AI and robots are the future of the company. In January 2022, he told Wall Street experts on a call that he thought the most important technology the company was working on was a humanoid robot. Regarding the company’s planned robot, Musk said, “This I think has the potential to be more significant than the vehicle business over time.”

It is clear that the robot is not ready for prime time: Tesla called the robot Optimus and showed it off at the company’s AI Day in September. It walked stiffly on stage, waved at the crowd slowly, and made hand gestures for about a minute. Still, Tesla is betting on a future run by robots, and over the past year, investors have sent the stock skyrocketing in the hopes that Musk and co. can come up with new ideas that will take the company to new heights.

Investors could be scared off by any sign that Musk won’t keep working in that field at Tesla. In Tuesday morning trade, Tesla (TSLA) shares fell 1.5%.

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A huge pay package

For a few years now, Musk hasn’t had a new pay plan. The last plan he had was the biggest pay package ever for a CEO. It was worth $56 billion when it was revealed in 2018. Because the deal was so big, Musk and Tesla were sued by shareholders last year over it, and they are still waiting for the Delaware Chancery Court to decide if the pay was too much.

The main plaintiff in that case said Musk used his power over the company and its board of directors to get the huge pay package. They also said Musk had enough motivation before he got the huge increase in shares because he already owned a lot of the company. Musk and the board of directors at Tesla were accused of breaking their duty to protect shareholders by wasting money and getting rich unfairly.

Musk said on Monday that he and Tesla are waiting for the court to rule on the case before they agree to a new pay deal.

“I should note that the Tesla board is great,” Musk said in an X post. “The reason for no new ‘compensation plan’ is that we are still waiting for a decision in my Delaware compensation case.”

Musk then said that he put “compensation plan” in quotes because the amount of ownership he has is what he cares about most. The CEO of Tesla said that he doesn’t have enough power at the company and is afraid that asset managers with big stakes in Tesla, like Fidelity and BlackRock, could make it harder for him to change the company if he wanted to.

“If I have 25%, it means I am influential, but can be overridden if twice as many shareholders vote against me vs for me,” Musk wrote. “At 15% or lower, the for/against ratio to override me makes a takeover by dubious interests too easy.”

A lot of tech companies use a voting system with two classes. This means that a founder or early leader like Musk has more than one vote for each share, which helps them keep their huge control over the company. For example, Mark Zuckerberg has 61% of the vote power at Meta, even though Vanguard, BlackRock, and Fidelity all own more Meta stock than he does.

But Musk said that Tesla couldn’t have a dual-class system because of a “post-IPO Delaware.” It’s not clear what Musk meant by that. The government has been against these types of ownership arrangements, but they are still legal.

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