Elon Musk Seeks Increased Voting Control in Tesla for an Important Reason
Tesla CEO Elon Musk has opened a can of worms with a four-word post on X. On January 13, he posted, “That would be nice.” The message popped up while Tesla shareholders, fans, critics, and haters discussed the company on the social media platform. Two days later, Musk added more details and context to the discussion.
Background and Context is Important
Unlike mainstream media outlets suggesting Musk went on an unprompted compensation rant, the CEO was merely further explaining himself to shareholders. On the 13th, an X user expressed concerns about Musk's apparent lack of Tesla engagement. Amy (_SFTahoe) highlighted that Musk hasn’t had a new incentive plan since completing his 2018 compensation milestones in 2022. Amy argued for significant goals and rewards for Musk, underscoring that mere share ownership isn't enough motivation and that Musk deserves a plan that matches his contributions and ambitions in AI, automation, and space exploration. That is when Musk chimed in with the four words.
That would be nice
— Elon Musk (@elonmusk) January 14, 2024
Two days later, Musk gave more details about his arrangement with Tesla. He expressed his discomfort with his current level of influence in the company. Musk stated his preference for approximately 25% voting control within Tesla, arguing that this level of influence is substantial but not overwhelming. He mentioned, "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." Vanguard controls more than 13% through its institutional and mutual fund holdings.
Holder | Shares | Date Reported | % Out | Value |
|---|---|---|---|---|
Elon Musk | 411,000,000 | NA | 13% | 91,000,000,000 (est) |
Vanguard Group Inc | 225,940,011 | Sep 29, 2023 | 7.11% | 49,456,008,869 |
Vanguard Total Stock Market Index Fund | 84,006,460 | Sep 29, 2023 | 2.64% | 18,388,173,978 |
Vanguard 500 Index Fund | 66,358,271 | Sep 29, 2023 | 2.09% | 14,525,161,898 |
Vanguard Growth Index Fund | 23,413,536 | Sep 29, 2023 | 0.74% | 5,124,988,880 |
Vanguard Institutional Index Fund-Institutional Index Fund | 18,528,798 | Sep 29, 2023 | 0.58% | 4,055,768,582 |
Share Structure and Compensation
Musk, who owns about 13% of Tesla, said he would consider building products outside Tesla unless he secures the desired voting control. He suggested a dual-class share structure as a potential solution but noted the challenges of implementing such a system post-IPO in Delaware. Musk's posts indicated no ongoing feud with the Tesla board, which he praised, and mentioned the delay in establishing a new compensation plan due to the pending Delaware compensation case.
Musk's focus on AI and robotics is a significant part of Tesla's future direction. He has touted the company's advancements in these areas, including developing the humanoid robot Optimus. Musk believes that AI and robotics are integral to Tesla's value, even more so than its automotive segment.
The Financial and Legal Context
Musk's statements come amidst financial and legal challenges. He sold a significant portion of his Tesla shares in 2022 to finance his acquisition of Twitter, which he renamed X. This sale reduced his stake in Tesla and his voting power. Additionally, Musk is involved in a lawsuit in Delaware over his previous compensation package, which is under scrutiny for its size and the influence Musk had in securing it.
I should note that the Tesla board is great. The reason for no new “compensation plan” is that we are still waiting for a decision in my Delaware compensation case. The trial for that was held in 2022, but a verdict has yet to be made.
— Elon Musk (@elonmusk) January 15, 2024
I put “compensation plan” in quotes,…
As Tesla awaits the decision in the Delaware compensation case, Musk's desire for increased voting control remains a central topic. The outcome of this case could influence the future structure of Tesla's leadership and Musk's role in the company. With the Q4 earnings report approaching, Tesla's strategic direction in AI and robotics and Musk's influence will be scrutiny.
Moving Forward
Musk's efforts to balance his various roles at Tesla, SpaceX, and X continue to be a point of discussion. His leadership style, often characterized by ambitious goals and unconventional approaches, has both been praised and criticized in the public and financial spheres.
Despite focusing on voting control and compensation, Musk's ambition for Tesla goes beyond financial incentives. His vision for Tesla involves significant advancements in AI and robotics, aiming to position the company at the forefront of technological innovation. This perspective aligns with Musk's broader goals of advancing human progress through technology.
