Renowned entrepreneur and CEO of Tesla and SpaceX, Elon Musk, expressed his intention on Monday to secure approximately 25% of voting control over his electric vehicle company, Tesla. This announcement comes as Musk currently holds around 13% of Tesla, equivalent to approximately 411 million shares, out of the 3.19 billion outstanding common stock shares, as reported in the company’s third-quarter financial filing for 2023.
Despite Musk’s significant existing stake, which was bolstered by substantial share sales in 2022 to fund the $44 billion leveraged buyout of Twitter, he is now aiming for further influence over Tesla. In a statement on his social network X, Musk conveyed his discomfort with the idea of growing Tesla into a leader in artificial intelligence (AI) and robotics without possessing the specified voting control. He emphasized a desire for enough control to be influential yet open to being overturned.
Musk asserted, “Unless that is the case, I would prefer to build products outside of Tesla.” This statement raised questions about the direction Musk envisions for Tesla’s future development.
Despite Musk’s previous assertions that Tesla is already a significant player in AI and robotics, his recent declaration contrasts with remarks he made earlier. In April 2022, during Tesla’s first-quarter earnings call, Musk predicted that Tesla’s humanoid robot, Optimus, would eventually surpass the value of the car business and full self-driving capabilities.
The push for increased control also appears to contradict Musk’s criticism of Tesla’s valuation made on December 27, 2023. Musk disputed Roth Capital senior research analyst Craig Irwin’s claim that Tesla was “egregiously overvalued,” defending Tesla as an AI/robotics company rather than a traditional automaker.
The quest for greater control by Musk may intensify the scrutiny on Tesla’s board of directors in 2024. Alongside concerns about CEO and director compensation, investors have raised issues regarding Musk’s management of multiple ventures simultaneously, divisive public commentary, ongoing federal investigations involving Musk and Tesla, and concerns over Musk’s reported drug use.
Additionally, Musk is currently embroiled in a trial in Delaware related to his $56 billion pay package from Tesla in 2018. Shareholder Richard J. Tornetta has filed a lawsuit against Musk and Tesla, alleging excessive compensation and a breach of fiduciary duty.
In response to the current situation, Musk stated that Tesla’s board is delaying the establishment of a new compensation plan until the Delaware chancery court makes a decision in the Tornetta case. Musk clarified that having 25% voting control would make him influential but still subject to being overridden by a larger opposing vote.
This development adds another layer of complexity to Tesla’s corporate landscape, as stakeholders closely watch how the company navigates these challenges and Musk’s continued influence.
