Tesla Chairman: If shareholders do not approve the $56 billion compensation package, Musk will leave Tesla

Tesla CEO Elon Musk faces a new shareholder lawsuit related to his 2022 Twitter acquisition. According to Business Times, the Employees’ Retirement System of Rhode Island (ERSRI) alleges that Musk and his brother, Kimbal Musk, used insider information to sell over $30 billion worth of Tesla stock between late 2021 and 2022. This sale reportedly occurred before announcements that led to a drop in stock prices.

ERSRI accuses Musk of concealing his plan to use the sale proceeds to acquire Twitter, alleging that he manipulated the stock price for personal gain.

Another Tesla shareholder, Michael Perry, filed a similar lawsuit in May, demanding the return of $7.5 billion. Perry's lawsuit claims Musk sold 41.5 million shares of Tesla stock worth $7.5 billion at the end of 2022, engaging in insider trading.

The lawsuit also claims Musk showed disloyalty to Tesla by reallocating Tesla employees to work on Twitter and assuming advertising costs post-acquisition. ERSRI is concerned that Tesla's board failed to adequately oversee Musk's conflicts of interest.

ERSRI's lawsuit comes as shareholders are set to vote on reinstating Musk's $56 billion compensation package. Approved in 2018, the plan grants Musk stock options if Tesla's market value increases by $50 billion and revenue targets are met. However, a Delaware judge invalidated the compensation plan in January, deeming it unfair to shareholders. Tesla will hold a shareholder meeting tomorrow (the 13th) to vote on Musk's $56 billion compensation package.

Norwegian Sovereign Wealth Fund, Tesla’s Eighth Largest Shareholder, Votes Against Musk's Compensation Plan

Norway’s sovereign wealth fund, Tesla's eighth-largest shareholder, announced its vote against Musk's compensation plan. Despite recognizing Musk's value to Tesla, the fund is concerned about the compensation's scale and seeks constructive dialogue with Tesla.

Musk responded on Twitter, saying, "Yes, it's not cool. If they truly polled the voters, they'd find overwhelming support. So far, around 90% of retail shareholders voting have voted in favor of these two resolutions. The public sentiment is clearly supportive."

Tesla Chairman Reluctant to See Musk Leave, Urges Shareholders to Vote in Favor

Tesla's chairman has written to urge shareholders to approve Musk's compensation plan and hinted that if the proposal is rejected, Musk might leave. The chairman emphasized Musk's unique role and the need for special incentive measures to retain his talent at Tesla.

In the letter, Denholm wrote:

"Musk is not a typical senior executive, and Tesla is not a typical company. The typical ways companies compensate key executives do not work for Tesla, and motivating talents like Musk requires something different.

We recognized this in 2018 and still recognize today that Musk certainly does not have unlimited time, nor does he lack creativity to bring incredible changes to the world 'elsewhere'. We hope these ideas, energy, and time remain at Tesla to benefit our customers. But this requires mutual respect."

sour：Tesla

Cathie Wood Voices Support for Musk

On the other hand, Cathie Wood voices support for Tesla's founder and CEO, Elon Musk.

Cathie Wood expresses support for Musk's substantial compensation, mentioning: "Including Ark, 73% of Tesla shareholders support this substantial compensation plan. The judge's ruling essentially deprived Ark of its voting rights as a shareholder. This ruling is un-American, anti-investor behavior, and an insult to the Tesla board." Musk himself personally retweeted Cathie Wood's statement, endorsing her support.

The shareholder voting results are closely watched by the public. Tesla's stock price closed at $170.66 on Tuesday, down 1.8%, with a cumulative decline of over 31% so far this year.