Elon Musk, the CEO of Tesla Inc. (NASDAQ:TSLA), has expressed concerns over potentially losing control of the electric vehicle giant due to the influence of activist shareholders.
What Happened: Musk, who currently owns a 12.8% stake in Tesla, is apprehensive about being dethroned by shareholders who may not align with his vision for the company’s future.
He suggests that a 25% ownership stake would offer him adequate influence, while still leaving room for his possible removal.
Musk’s fears are rooted in past instances where shareholders voted in favor of a compensation package tied to the company’s growth targets, only to be overruled by Delaware Chancery Court Judge Kathaleen McCormick.
Earlier in January in a post on X, he shared that about 25 percent ownership stake would be enough "to be influential, but not so much that I can't be overturned.”
Musk has the opportunity to acquire an additional 304 million shares, which would boost his voting control by roughly 4% post-tax.
In a recent statement on Friday on X, Musk affirmed that he has no personal loans against Tesla stock and reiterated his anxieties about being ousted by “activist shareholders”. He expressed optimism that these concerns would be addressed at the forthcoming shareholders’ meeting.
There are rumors that Musk may resign if his ownership stake is curtailed, akin to the limitations imposed on his pay package.
Nonetheless, a majority of shareholders who endorsed Musk’s pay package continue to support his leadership of Tesla’s operations.
Why It Matters: Musk’s concerns highlight the potential power dynamics at play within Tesla’s shareholder base. His potential loss of control could significantly impact the company’s strategic direction, given his instrumental role in shaping
Tesla’s innovative trajectory. The upcoming shareholders’ meeting will be a critical event, potentially determining the future of Musk’s leadership at Tesla.
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