Technology
Tuesday, January 16th, 2024 4:29 pm EDT
Key Points
- Elon Musk’s Desire for Increased Voting Control: Elon Musk, CEO of Tesla and SpaceX, as well as the owner of the social network X, expressed his desire to obtain approximately 25% of voting control over Tesla, the electric vehicle giant he co-founded. Currently holding around 13% of Tesla shares, Musk aims for increased influence while avoiding an overwhelming level of control. This announcement follows Musk’s significant sale of Tesla shares in 2022 to finance a $44 billion leveraged buyout of Twitter.
- Tesla’s AI and Robotics Focus: Musk’s statement contradicts his previous remarks emphasizing Tesla’s importance in artificial intelligence (AI) and robotics. Musk highlighted that achieving 25% voting control is crucial for growing Tesla as a leader in AI and robotics. Despite Tesla’s strong position in the automotive sector, Musk argued that the company’s future lies in being an AI and robotics company, showcasing the Optimus humanoid robot and underlining the depth of Tesla’s expertise in AI, compute hardware, and robotics.
- Challenges and Pressures on Tesla’s Board: Musk’s desire for increased control adds pressure to Tesla’s board, which is already grappling with various challenges. Investors and lawmakers have raised concerns about Musk’s divided focus on multiple ventures, including SpaceX and X Corp., along with his controversial social media commentary. Ongoing federal probes involving Musk and Tesla, worries about drug use by the CEO, and a trial in Delaware over Musk’s earlier $56 billion pay package are additional factors contributing to the scrutiny. Tesla’s board is also awaiting a decision in Musk’s Delaware compensation case before establishing a new compensation plan for him. The dynamics between Musk and Tesla’s board are under heightened attention as the company navigates legal challenges and corporate governance issues.
Tesla and SpaceX CEO Elon Musk, who is also the owner of the social network X (formerly Twitter), has expressed his desire to obtain approximately 25% of voting control over Tesla, the electric vehicle business he co-founded. Currently, Musk owns around 13% of Tesla, translating to roughly 411 million shares out of the company’s 3.19 billion outstanding common stock. Musk conveyed his intentions on X, emphasizing his discomfort with growing Tesla’s leadership in artificial intelligence (AI) and robotics without having significant voting influence. He stated that having ~25% voting control would make him influential but not immune to being overturned. Musk argued that, without this level of control, he would prefer to build products outside of Tesla. This announcement comes after Musk sold billions of dollars worth of Tesla shares in 2022 to finance a $44 billion leveraged buyout of Twitter.
Musk’s post on X stood in contrast to his earlier statements highlighting Tesla’s importance in AI and robotics. In April 2022, he predicted that Tesla’s humanoid robot, Optimus, would ultimately be worth more than the car business and full self-driving combined. However, Musk’s recent criticism of analyst Craig Irwin’s views on Tesla’s valuation underscored the company’s emphasis on being an AI and robotics company rather than a traditional automaker. Despite Tesla’s financial filings showing a significant portion of revenue coming from the automotive segment, Musk argued that the business is increasingly focused on AI, robotics, and automation.
Musk’s call for more control over Tesla is likely to intensify pressure on the company’s board, which is already dealing with various challenges. Investors and lawmakers have expressed concerns about Musk’s divided focus on multiple ventures, including SpaceX and X Corp., along with his controversial social media commentary. Ongoing federal probes involving Musk and Tesla, as well as concerns about Musk’s reported drug use, have added to the scrutiny. Moreover, Musk is currently facing a trial in Delaware over his $56 billion pay package from Tesla, with shareholder Richard J. Tornetta alleging excessive compensation and breach of fiduciary duty.
Musk revealed that Tesla’s board is deferring the establishment of a new compensation plan until the Tornetta case is decided. He emphasized that having 25% voting control would provide him with influence but still allow shareholders to override decisions if twice as many voted against him. The announcement raises questions about the future dynamics between Musk and Tesla’s board, particularly as the company navigates through various legal challenges and corporate governance issues.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/16/elon-musk-wants-more-control-of-tesla-seeks-25percent-voting-power.html
