Musk fears potential ousting by activists

The Tesla chief says protection from being exited, rather than financial reward, is behind his demands for more control

Musk fears potential ousting by activists
Many analysts put AI at the heart of the Tesla value proposition

Elon Musk has put more meat on the bones of his quest to change the shareholding structure at automaker Tesla to gave him a say greater than his current stock position. And he stresses that it is fear of a palace coup, not greed, that is motivating him.

The often unconventional Tesla CEO took to another of the businesses he runs, social media network X (formerly Twitter), earlier this month to first raise the idea that a new class of shares be introduced to take his voting rights up to 25pc, from where they currently sit in the mid-teens.

“I am uncomfortable growing Tesla to be a leader in AI & robotics without having approximately 25pc voting control,” he posted. “Enough to be influential, but not so much that I cannot be overturned.”

And, at that point, he threatened to do more outside the Tesla envelope. “Unless that is the case, I would prefer to build products outside of Tesla. You do not seem to understand that Tesla is not one start-up, but a dozen,” he continued.

“If I have 25pc, it means I am influential, but can be overridden if twice as many shareholders vote against me versus for me,” he concluded. But, even at the point of taking to X, he was prepared to concede that one way of procuring his desired 25pc stake —  a dual class stock structure — is prohibited in Delaware, where Tesla is domiciled, because the firm is already post-IPO.

And he also emphasised that there was “no battle or feud” with Tesla's board, while stressing the hiatus in agreeing a new compensation plan is due solely to ongoing legal proceedings.

More measured

This more conciliatory side of Musk was on display as he expanded further on his motivations while Tesla presented Q4 results. “Let me explain what my concern is here, which is that I see a path to creating an artificial intelligence and robotics juggernaut of truly immense capability and power,” Musk says.

“And my concern would be — I do not want to control it, but if I have so little influence over the company at that stage that I could be voted out by some sort of random shareholder advisory firm.”

Musk’s ability to shoot from the hip, however, remains firmly intact. “We have had a lot of challenges with Institutional Shareholder Services, ISS —  I call them Isis —  and Glass Lewis,” he says, admittedly with a laugh at his close-to-the-bone joke.

“There are a lot of activists that basically infiltrate those organisations and have strange ideas about what should be done,” Musk continues.
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And he stresses that influence is his primary concern. “I am not looking for additional economics; I just want to be an effective steward of very powerful technology,” Musk says.

“And the reason I just sort of roughly picked approximately 25pc was that it is not so much that I can control the company. Even if I go bonkers and if I am mad, they can throw me out. But it is enough that I have a strong influence.

“That is what I am aiming for, a strong influence, but not control. If there is some way to achieve that, that would be great,” the Tesla chief concludes.

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