Tesla’s largest retail investor, Leo KoGuan, who owns 27.8 million TSLA shares worth $4.8 billion, has shared proof that he voted against reinstating Elon Musk’s $56 billion compensation package. This has caused uncertainty about Musk’s future at Tesla.
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In 2018, Tesla shareholders voted by a supermajority to award Elon Musk the biggest CEO compensation package in history.
Although enormous, Elon Musk's compensation package is not without conditions. The CEO award is entirely performance-based and intricately tied to Tesla's stock price and financial performance. Musk could serve Tesla for free if he fails to meet these ambitious goals.
Luckily for Elon Musk, Tesla met the seemingly unachievable goals and exceeded them handily, way ahead of the ten-year deadline to achieve the performance metrics.
At its peak in November 2021, Tesla’s market capitalization stood larger than the ten biggest automakers combined. Since 2018, Tesla has also become a consistently profitable company, reversing a decade-long trend of posting annual losses.
Since the CEO compensation package was passed on the vehicle front, Tesla successfully completed the Model 3 ramp in Fremont, California, and Shanghai, China. Tesla also opened several new factories: Giga Berlin, Giga Texas, and Lathrop Megapack Factory.
Tesla introduced and ramped up Model Y production to become the world's best-selling vehicle, whether electric or with an internal combustion engine.
Even more impressively, the Model Y surpassed popular vehicles half its price, such as the Toyota Corolla, to become the best-selling vehicle in the world.
Tesla has also launched the most anticipated vehicle in the world—the Cybertruck—and grown the supercharger network to be by far the best fast charging network globally. Tesla’s energy business has also grown to become a source of profit.
Under Elon Musk’s stewardship, Tesla has also become a leader in full self-driving technology. Although Tesla has not yet achieved level 5 full autonomy, the company is making great strides in that direction.
Yesterday, Elon Musk revealed that a major FSD update, which will be released in the coming days, will improve miles driven without intervention by 5 to 10 fold. Musk added that an even better FSD version is in the works and will be released at the end of June. Musk says this FSD version will debut on the Cybertruck.
Everything I have mentioned above is to say that, under Elon Musk’s leadership and since the CEO compensation package was approved in 2018, Tesla has grown in ways that are hard to fathom. As was agreed upon, Elon Musk has been awarded his massive $56 billion compensation package.
One thing to note is that Tesla did not hand over $56 billion in cash to Musk but gave the CEO an option to buy shares at a predetermined price. However, since the stock price has grown more than tenfold, the shares are now worth over $56 billion.
This was all well and good; however, a Tesla investor with only 9 Tesla shares in cahoots with a large law firm sued Tesla in a Delaware court, stating that the compensation package was unduly afforded to Musk and managed to get a ruling to dissolve Musk’s entire compensation package.
This ruling means that Musk has worked for Tesla for the last five years without pay. At this point, you might still be inclined to support the court’s ruling; it’s fair to think the compensation package was too large or that the Tesla board of directors that negotiated the deal with Musk was not independent.
However, in a brazen offense to common sense, the law firm that won the case against Tesla and Elon Musk by arguing that it’s trying to protect shareholders has now asked the courts to compel Tesla to pay the firm more than $5 billion in legal fees.
Elon Musk worked for Tesla for years, grew the company to incredible heights, and is forced to do so without compensation. In contrast, a law firm that did nothing to help Tesla achieve any of its goals has to be paid $5 billion by the same shareholders that the law firm was purportedly looking to protect.
I’m sure everything that happened here is above board if we are strictly speaking in technicalities of the legal system; however, if we zoom out of the nitty gritty and see the bigger picture, the Delaware court ruling that disenfranchises the CEO and shareholders while enriching the lawyers who provided no value to the company falls on the face of common sense.
Following this ruling, Tesla has asked shareholders to ratify the 2018 CEO compensation package again and move Tesla’s state of incorporation from Delaware to Texas.
This is where the drama starts to unfold. Since 2018, and especially since he purchased the social media platform Twitter and renamed it X, Elon Musk has emerged as a highly divisive and political figure.
Whether you agree with Musk’s politics or not, that’s your decision; however, you have to admit that, largely due to his political statements, Musk has alienated a large swath of the Tesla community, which historically leans left.
Since 2018, Musk has burned bridges with several prominent Tesla investors and media personalities. I’m not here to assign blame and pass judgment on who is right or wrong; however, the fact still remains these prominent individuals in the Tesla community, including large investors and media personalities, now have the chance to show their dissatisfaction with Elon Musk and they all appear to be voting against the ballot to reinstate Elon Musk’s 2018 compensation package.
Today, one such individual, Leo KoGuan, Tesla’s biggest retail investor with 27.7 million TSLA shares, shared picture proof showing he voted against the proposal to reinstate Musk’s 2018 CEO package and move Tesla’s state of incorporation from Delaware to Texas.
Leo KoGuan also revealed that he voted against all other Tesla-recommended ballot measures, including re-electing Kimbal Musk to Tesla’s board of directors and even against nitty-gritty recommendations such as ratifying an independent registered public accounting firm.
KoGuan’s 27.7 million shares, multiplied by Tesla’s $173 share prices, comes out to $4.8 billion worth of Tesla shares, which voted against reinstating Musk’s compensation plan. In other words, Leo KoGuan owns a little less than 1% of Tesla and has shared proof that he has voted against all Tesla board-supported ballot measures.
Sharing his votes against Musk and the Tesla board of directors, Leo Koguan wrote, “Papa stepped on us insects, we bite back. Voted 27,686,009 shares to bite Papa back.”
Unlike most Elon Musk super fans turned detractors, Leo Koguan’s issue with Musk doesn’t appear political or personal. This largely stems from Musk selling a large chunk of Tesla shares on the open market to purchase Twitter for $44 billion.
When Musk sold billions of dollars of Tesla shares at once, it increased the supply, crashing Tesla’s stock price by more than twenty percent, thereby harming LeoKoguan’s enormous Tesla investment.
Leo KoGuan’s decision to vote against the ballot to reinstate Musk’s compensation package and other similar actions taken by prominent Tesla community members shows that Musk is no longer the once undisputed darling of the Tesla community.
Musk appears to have lost a lot of goodwill among Tesla community members when he offloaded the EV maker’s shares in order to buy Twitter.
What has happened is already in the past, and there is no going back; however, this also raises questions about Tesla’s and Elon Musk’s future in the company.
Could Elon Musk leave Tesla?
Musk appears to have lost support from a large proportion of the retail Tesla investor community. Several prominent Tesla individuals who lauded Musk as a hero now question whether Musk has overstayed his welcome at the helm of Tesla.
Retail Tesla investors who no longer support Musk are divided into two camps: those who believe Tesla would be better off if Musk left the company altogether and those who believe Musk’s power over Tesla should be reigned in, but the founder should remain CEO.
Individuals in the second camp regard claims Musk could leave Tesla if investors don’t reapprove his compensation package as unfounded. These individuals believe these are scare tactics used by Musk loyalists to get what they want.
To be fair to this camp, Musk has previously stated that he remains committed to Tesla and will not leave the company even if he doesn't get a compensation package.
However, the discontent among the Tesla retail investors regarding Musk now appears to go beyond the compensation package, and this camp is looking to remove Elon’s brother, Kimbal Musk, from the Tesla board.
These investors are also looking to upend the remaining Tesla board of directors in order to significantly limit Musk's power and easily restrain his ability to decide the company's future course.
If this camp gets its way, a reasonable person could ask whether Elon Musk could leave Tesla and what the ramifications of such a decision will be for investors.
One of Tesla's biggest future promises is solving level 5 autonomy and creating a Robotaxi business that will revolutionize the world.
Most automakers can’t compete in this highly advanced technological realm. Tesla has come ahead in the brutal talent war for highly skilled AI engineers primarily due to Musk’s personal involvement.
Although highly unlikely, if Elon Musk decided to leave Tesla, there is no doubt that a large chunk of Tesla’s AI talent would happily leave with him for a different venture.
However, before stocking fears, something to note here is that thanks to Tesla’s incredible infrastructure—including the company’s enormous training computer cluster, highly efficient in-vehicle inference computers, millions of vehicles out on the road collecting real-world data, integration between hardware and software design, ability to dictate future Robotaxi parameters and so on, for Elon Musk, Tesla will still be by far the best place for him to solve level 5 autonomy.
Even if Tesla investors vote against reinstating the 2018 performance-based CEO compensation package, Musk still owns 20 percent of Tesla. By solving level 5 autonomy within the EV maker, Musk stands to benefit financially more than anyone.
According to the latest count, the percentage of Tesla shares held by institutional investors has decreased from 70% in 2018 to 46% today. On the other hand, the percentage of Tesla shares held by retail investors has grown to 30%, with the remaining 24% owned by Musk and his family.
With a 30% voting block, retail investors now have a significant sway in deciding Tesla’s future. Regardless of your position on the issues, it’s imperative that you vote your shares and let your voices be heard.
Tesla has scheduled the company’s 2024 annual shareholder meeting for Thursday, June 13, at 3:30 PM CT. We will know the final results of these votes during the event. Until then, visit our site, torquenews.com/Tesla, regularly for the latest updates.
So, what do you think? Are you surprised to see a large swath of the Tesla retail investor community turn on Elon Musk? What do you think Musk should do to regain the trust of his supporters? Let us know your thoughts in the comments below by clicking the red “Add new comment” button.
Image: Screenshot from Elon Musk’s TED interview
For more information, check out: A U.S. Army Veteran, EV/Tech YouTuber Says – “Tesla is Refusing To Give Me a Replacement Cybertruck After Mine Has Been Broken 4 Times” – “I have 16.8 Million Views Showing Issues With My Cybertruck”
Tinsae Aregay has been following Tesla and the evolution of the EV space daily for several years. He covers everything about Tesla, from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.
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