Elon Musk leaned on Tesla’s board to arrange another massive performance award for him after he sold a significant chunk of his stake in the company to acquire Twitter.
In one of several posts on the topic, Mr. Musk wrote that unless he has roughly 25% voting control at Tesla, he’d prefer to build artificial intelligence and robotics products elsewhere. While he remains the carmaker’s biggest shareholder with an almost 13% stake, he cashed in almost $40 billion worth of shares in 2022 to help fund the Twitter deal.
Mr. Musk, 52, praised Tesla’s board in other posts and said directors were waiting for a Delaware Chancery Court ruling before preparing another compensation plan. Judge Kathaleen St. J. McCormick — who also presided over Mr. Musk’s ill-fated attempt to get out of the Twitter deal — will decide a case brought by a Tesla shareholder who alleges Tesla’s board failed to exercise independence from Mr. Musk as it drew up his $55 billion performance award in 2018.
“This is primarily about ensuring the right amount of voting influence at Tesla,” Mr. Musk wrote in one of his posts on X.
Mr. Musk is pressuring Tesla’s board at an awkward time. The carmaker is off to its worst start to any year as a public company, losing $94 billion in market value as growth slows and profit margins shrink. The CEO also has had to answer to a Wall Street Journal report on his drug use and concerns this has elicited among executives and directors at his companies, including at Tesla.
Tesla shares fell as much as 2.7% before the start of regular trading Tuesday. At $695.8 billion, the company’s market capitalization has risen more than 11-fold since the board announced Mr. Musk’s pay award in January 2018. On the other hand, its valuation peaked at more than $1.2 trillion before the Twitter deal.
The combination of awards Tesla arranged for Mr. Musk in 2009, 2012 and 2018, and the value destruction caused by his Twitter acquisition, resulted in a dubious milestone a little more than a year ago when he became the first person ever to erase $200 billion from their net worth.
His fortune recovered last year as Tesla shares doubled and Space Exploration Technologies Corp.‘s valuation soared. Mr. Musk reclaimed his rank atop the Bloomberg Billionaires Index and is now worth an estimated $206.1 billion, roughly 15% more than No. 2 Jeff Bezos.
His claim that he’s “uncomfortable growing Tesla to be a leader in AI & robotics” follows repeated boasts over the years that the company was a leader in the fields. Tesla markets products it calls Autopilot and Full Self-Driving — both of which are driver-support features — and has been developing a humanoid robot called Optimus.
The CEO also told analysts in July that he expected Tesla to spend more than $1 billion over the next year on Project Dojo, an effort to make the company a player in supercomputing for purposes including the development of self-driving capability.
At Tesla’s inaugural AI Day in August 2021, Mr. Musk said he wanted to demonstrate that the company is more than just a carmaker and arguably the leader in real-world AI. In July of last year, he announced the formation of xAI, a startup that aims to rival Microsoft Corp.-backed OpenAI and Google’s Deepmind. A week later, an analyst asked him during a Tesla earnings call whether the new AI company would overlap with, compete with or enhance the value of the carmaker’s AI efforts. He said the latter.
“What is Tesla? A car, energy, or AI company,” said Daniel Kollar, head of consultancy Intralink’s automotive and mobility practice. “If it’s not an AI company, then I don’t see an issue establishing a new company.”
“That said,” Mr. Kollar added, “I don’t see his behavior or choice of language benefiting any of his companies now.”
First Published January 17, 2024, 10:30am
