What Happened: Musk has previously expressed discomfort with advancing Tesla in AI without having 25% voting. Unless Musk gets this, shareholders must be prepared for the company slowing down AI investments, Jonas wrote in a note on Tuesday.
“While Tesla may still be in a position to benefit indirectly from AI advancements, we believe that most of the adjacent AI efforts could be concentrated within non-Tesla entities where Elon Musk has control in the event Mr. Musk does not reach a 25% voting share of Tesla,” Jonas wrote.
Tesla’s board is now attempting to have it reinstated with another shareholder vote, the results of which will be declared at the company’s annual shareholder meeting on June 13.
While the approval of the pay package by itself does not assure the CEO of his desired voting block, it would make it "increasingly difficult" for Musk to achieve 25% ownership if the package is rejected, the analyst noted in May, while adding that the vote will likely determine the long-term strategic direction of the company and drive material volatility in Tesla shares.
However, on Tuesday, the Tesla bull said there may be any number of potential paths for the CEO to achieve a 25% voting stake in the company over time even without the inclusion of the compensation package.
Proxy advisory firms Glass Lewis and Institutional Shareholder Services (ISS) have advised Tesla shareholders to vote against Musk’s pay package claiming it to be “excessive.”
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