Tesla Board Chair Robyn Denholm has shared her insights on Elon Musk’s 2018 pay package, as well as the possible scenarios that may unfold following TSLA shareholders’ vote to ratify the CEO Performance Award. The Tesla Chair of the Board shared her thoughts in a CNBC interview.
Tesla has been putting a lot of effort into encouraging investors to vote for the ratification of Elon Musk’s 2018 CEO compensation plan. But while Tesla retail shareholders and a number of large investors have stated that they would vote to ratify the CEO’s 2018 pay package, there is a chance that the vote would not go in favor of Musk.
As per Ms. Denholm, there are a number of things that Tesla can do to respond to a “No” vote on Musk’s 2018 pay package, but they would likely cost shareholders more. The Tesla Board Chair noted that the compensation tied to the 2018 CEO Performance Award was worth about $2.3 billion in stock-based compensation charges at the time, and it had already been paid out.
A deal is a deal.
— Tesla (@Tesla) June 10, 2024
@elonmusk transformed Tesla from a loss-making company to a company that’s changing the world.
And he created tremendous value – over $735 billion – for $TSLA stockholders along the way.
Elon upheld his end of the bargain; it is time to uphold ours.… https://t.co/Bk3QEi7b4g
In the event that TSLA shareholders vote against the ratification of Musk’s 2018 pay package, Tesla may need to craft another plan with similar grants. Denholm noted that this would cost about $25 billion worth of stock-based compensation today, as noted in an Insider report. This suggests that it would be more cost effective for TSLA stockholders to simply ratify Musk’s 2018 compensation plan.
When Denholm was asked if she believed Musk could file a lawsuit against Tesla if the company’s shareholders reject the ratification of his 2018 CEO Performance Award, the Board Chair admitted that it was “possible,” but it was something that Musk had not brought up to the Board. “Well, the good part about the legal system in the US is anybody can sue anybody,” the Board Chair noted.
Overall, Denholm highlighted that ratifying Musk’s 2018 CEO Performance Award is still the best option. “Ratifying the plan is the best option. Clearly, if it doesn’t pass, then there are other alternatives, but none of them are as good from a shareholder perspective as actually ratifying the plan,” she noted.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
