Elon Musk Seeks $1 Trillion to Defend Tesla from Corporate Takeover

Elon Musk has announced a strategic goal to enhance his stake in Tesla with the potential of becoming the world’s first trillionaire. However, Musk emphasized that the focus is not on personal wealth. Instead, he believes a significant compensation package is essential to secure his control over the company amidst external pressures.

Need for Increased Control

During a recent investors’ call, Musk stated, “It’s not like I’m going to go spend the money.” His primary concern is maintaining enough voting control to ensure his influential position within Tesla, while still allowing for accountability. Musk highlighted the need to counteract recommendations from research firms Institutional Shareholder Services (ISS) and Glass Lewis, which he criticized as “corporate terrorists.”

Concerns Over Shareholder Influence

These firms have a reputation for advising shareholders on voting matters. Musk expressed discomfort with the idea of losing his position due to their “asinine recommendations.” He argued that these firms have suggested decisions that could jeopardize Tesla’s future, particularly given their historical poor recommendations.

Passive Funds and Shareholder Voting

Musk pointed out that passive index funds, which own a large portion of Tesla shares, often adhere to the advice from ISS and Glass Lewis without thorough consideration. Despite this, Tesla’s shareholders have typically supported the company’s board’s proposals during votes.

• In 2018, shareholders approved a substantial pay package for Musk with 73% support.
• A previous ruling by a Delaware judge deemed that pay package contrary to shareholder interests.
• A follow-up vote saw 84% approval after adjustments were made.

Currently, ISS and Glass Lewis have suggested opposing Musk’s latest pay package, but they have not commented on Musk’s derogatory remarks.

Musk’s Current Holdings and Future Plans

Musk holds 413 million shares of Tesla, along with options for an additional 304 million shares—though legal challenges have diminished these options. The Delaware Supreme Court recently addressed these matters. Should the court rule favorably, Musk could potentially own approximately 16% of Tesla’s outstanding shares.

His latest proposed pay package aims to grant him rights to 423.7 million additional shares, contingent upon meeting increased valuation benchmarks for Tesla. If achieved, this package could yield nearly $1 trillion.

Balancing Interests

Tesla’s board argues that this compensation is crucial to keep Musk focused, given his diverse portfolio that includes roles at SpaceX and xAI, as well as ownership of the social media platform X (formerly Twitter). The company’s proxy statement underlined the importance of retaining Musk to reach the ambitious goals of becoming the most valuable company globally.