Tesla Shareholders Close to Deciding on Musk's $1 Trillion Pay Package

Bloomberg

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00:00I want to start by just clarifying some things for our audience.

00:04Now that the proxy's filed and the proposed compensation plan is out there,

00:08have you continued to be engaged with Tesla's special committee or was that work finished?

00:13No, we've still been very actively involved with the special committee throughout this whole

00:18process. Obviously, that was just the start of it to kind of work with them. But we've been

00:23working with them ongoing and they've been engaged with all their advisors and legal advisors along

00:28the way. And since the proxy was filed and shareholders became aware of the terms of the

00:33proposed compensation agreement, what is it specifically that you have been talking to

00:39the special committee and the board about? Well, the issues that most people see every

00:44single day, a lot of the headlines that come up and then how can we proactively really address

00:49those? And more importantly, it's just really to make sure that it's clear. Obviously, as your

00:54viewers certainly saw the proxy advisors came out and actually commented on the plan and some other

01:01aspects as well. And then we just wanted to make sure that the shareholders, not the proxy advisors,

01:07were very fully informed about what the plan is and why this is different from what the ISS or

01:14Glass-Lewis is really reviewing. So the biggest headline of this week is that Norway's sovereign wealth fund

01:22came out and voted no against the proposed pay package. Not an advisory, but an actual shareholder.

01:29I believe Tesla's ninth biggest shareholder. And their argument was very simple, that they appreciated

01:35the significant value that Mr. Musk has created, but argue that this proposal, the total size of the

01:42award is too great. And like the advisory services, they're worried about dilution. Could you respond to

01:48that dilution part? Yeah, well, first, let me just address, obviously, they also oppose the pay plan

01:56on the ratification last year as well. So for me, it was a little hard to understand kind of the

02:02rhetoric versus the reality because they've been a shareholder in Tesla since 2011. So right after the

02:08IPO, they had a very small position and they've actually continued to build that position to where

02:13they are today. So although they may have some concerns, they've enjoyed the benefit of nearly a

02:1940,000% increase in their share value during that particular time and constantly adding to their

02:25position. So they're obviously willing to enjoy the benefits of that. You know, with respect to the

02:32dilution, it's been very clear about what the plan was. And I know we talked about this last time, Ed, which

02:38was when the special committee, Robin Denholm and Kathleen Wilson-Thompson sat down with Elon to

02:45understand not only his vision for master plan four, but obviously what he wanted to accomplish.

02:50And Elon has been very clear about this and obviously the chair as well, which is he wanted to make

02:55sure he has enough voting influence. And that number was around 25% that would matter for him.

03:02That this has been discussed as well, which is the committee reviewed numerous ways of finding a

03:09way to actually accomplish the voting and decoupling the economics. And unfortunately, under current

03:15exchange rules that we have today with either, you know, NASDAQ, NYSE has a similar rules. You can't go

03:21and do a high vote or dual class listing once you've been listed on the exchange.

03:27Shane, we've also spoken to Tesla's board chair, Robin Denholm, subsequently since you're on the

03:33program, right? And there is an acknowledgement that there is a very real risk that if this is

03:38a no vote in the end, Elon Musk either leaves Tesla or he pairs back his activities in a different

03:45role or he focuses more attention elsewhere. You are privy to these conversations. You've just told us

03:51that what is the plan B? What is the, I guess, mitigation of key man risk in the event that you

03:58don't secure the votes? Yeah, I know Robin has addressed this specifically with both you and

04:04Caroline as well. You know, quite frankly, and this is really what I classify really as a kind of a

04:10Super Bowl performance that we're doing right now. We're focused on winning the game and not looking

04:15at what happens if we lose. I actually do believe that the shareholders are going to come out in a very

04:20strong way tomorrow and really support not only the plan, but the directors. We're obviously up

04:27for nomination and all the proposals that are put forth. And I think a lot of that is already out

04:31there. So I don't think there's really a need to focus on plan B. I can assure you that they're a

04:36very diligent board. They fought through these things, but I think everyone's very focused on

04:41winning. We continue to get the same question for you and for the board, which is this is the first

04:46vote under Texas law? What do shareholders need to know that's different under Texas law from what

04:52they voted previously under Delaware law? Yeah, I would say the biggest one that comes up is that,

04:58you know, insiders, particularly in a transaction like this, are allowed to vote their shares

05:03in this particular election. So, you know, Elon's shares will definitely be counted and included in

05:11part of this process, whereas previously, as it was discussed within Delaware, it's not. I'd say

05:16that's really the fundamental big change. But quite frankly, if everyone recalls, the previous plan,

05:22the 2018 plan, both originally in 2018, but also in the ratification in 2024, it had over 70 plus

05:30percent shareholder approval, which did not include Elon's in that particular time. So I do think we're

05:35going to have a lot more of a support here than some of the headlines are reacting to right now.

05:41But that is really one of the bigger changes here for Texas.

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