The former chairman of Tesla’s audit committee and well-known clean technology venture capitalist said he would not support Elon Musk’s $56 billion compensation package and said he understands why other investors would vote against the CEO’s pay proposal next week.
“Look, Elon has done an extraordinary job; he has built one of the most transformative companies of our time. But to ask for a $55 billion raise at a time when the company has missed quarterly numbers, growth is slowing and 15 percent of the workforce has been laid off is, I would say, hubris to say the least.”
This is what Steve Westly sayswho spoke on CNBC on Thursday. He served on Tesla’s board from 2007 to 2010 and is a former controller and chief financial officer for the state of California. Westly has served on the boards of the state’s two largest pension funds, CalSTRS and CalPERS, which invest more than $500 billion.
The truth is that “a lot of pension funds around the world,” including those in California, “will most likely vote no,” Westly said, adding that “there will be a lot of drama next week and everyone will be on tenterhooks.”
Tesla shareholders will vote in an important vote on Musk’s salary package, which is worth a maximum of $56 billion. A judge revoked his compensation in January for corporate governance reasons, and Tesla’s board is asking shareholders to ratify it a second time at its annual shareholder meeting next week. The board has also asked investors to support a move of the company’s headquarters from Delaware to Texas, where Tesla is headquartered.
Tesla’s investor base is a mix of large institutional investors, including The vanguard Group with 7.2% and Blackrock with 5.9%. according to Tesla’s 2024 shareholder report. Musk also holds a significant stake in the company, in addition to an army of smaller private investors who Tesla promotes with advertising and eventsInvestors have begun posting on social media when they will vote their shares and offering advice to others on how to make sure they vote in time for the meeting. Other large, prominent investors have publicly sided with Musk.
Long-time Tesla bull Cathie Wood, posted Thursday at X that “no other executive is as on the side of shareholders as Musk.” Based on the pay package that will be voted on next week, Musk will have worked without pay since 2018, Wood wrote. Current shareholders will also benefit from Musk running Tesla for another five or more years, said Wood, founder, CEO and chief investment officer of Ark Investment Management.
“How can shareholders reject his compensation package AFTER Elon and shareholders have already taken the risks associated with Tesla’s rise to become the world’s best-selling car? That’s irresponsible!” Wood wrote.
Other investors, however, are firmly on Westly’s side. The founder of Westly Group said profitability and growth have slowed since Tesla’s meteoric rise between 2018 and 2021. In addition, shareholders are concerned about the company’s ability to deliver a lower-cost Tesla vehicle with fully autonomous driving capability.
“The facts on the ground have changed and I think that’s why shareholders will probably come back with a very different perspective,” Westly said.
According to Westly, it is unclear whether Musk will stay with the electric car manufacturer if the proposal does not find a majority.
“If you had asked me a year or two ago whether Elon would leave Tesla, I would have said not in a million years,” he said. “Now that outlook is a little murkier – we’ll see.”
Tesla did not immediately respond to a request for comment.