Elon Musk, the CEO of Tesla Motors, may leave the company if his $56 billion pay package is not approved by the company’s shareholders.
In a letter to the US Securities and Exchange Commission, Robyn Denholm, chairperson of the board of directors, said “Elon is not a typical executive, and Tesla is not a typical company”, and that he didn’t “face any shortage of ideas and other places he can make an incredible difference in the world”.
The company’s shareholders will decide on the pay package on June 13.
Musk turns Tesla around
Denholm recounted how Musk was instrumental in turning around Tesla’s fortunes.
“Elon’s unique contributions have built Tesla from a company that was, in 2018, a loss-making, ambitious company with significant hurdles and challenges to overcome into what it is today — a company that is literally changing the world by driving so many critical initiatives that are making our planet more sustainable while at the same time delivering hundreds of billions of dollars of value to all of you who invested in Tesla’s dream. These contributions should be respected,” she wrote.
It’s not about the money
The vote for Elon Musk’s pay package is not about the money, but about sticking to a commitment made in 2018, she said. At that time, the commitment received a seal of approval from around 73 percent of shareholders.
“This is obviously not about the money. We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018,” she wrote.
Not everyone, however, is in favour of the hefty pay package.
For instance, Institutional Shareholder Services, a proxy advisor, has recommended that Tesla shareholders vote against ratifying the pay package, calling it “excessive”.
Proxy advisory firm Glass Lewis had made a similar recommendation a few days prior.
Why Musk must stay
The main reason the pay package was approved was to ensure Musk remained focused on the task at hand, the chairperson wrote.
The commitment is about “retaining Elon’s attention and motivating him to focus on achieving astonishing growth for our company”, she added.
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