Tesla boss in line for mega-pay deal | Daily News

Tesla boss in line for mega-pay deal

Elon Musk
Elon Musk

Electric carmaker Tesla, facing pressure on a number of fronts, is asking shareholders for a show of support for chief executive Elon Musk.

The firm has called a special meeting this month for investors to vote on a 10-year compensation plan for Musk.

Under the plan, Musk could receive stock awards worth an estimated $2.6bn - among the largest in US history.

The grants would only be distributed if the firm, which has made consistent losses, hits certain milestones.

Major holders of Tesla stock, including investment firms Baillie Gifford and T Rowe Price, have said they intend to support the pay plan, providing a vote of confidence.

But shareholder advisory groups have cautioned against the proposal, saying it is too generous.

The vote comes as Tesla confronts several years of mounting questions about its operations.

Investors are impatient about delays in the production of Model 3 cars, a new model that is supposed to target a more mass-market clientele.

US regulators have raised questions about the firm's financial disclosures, while some shareholders have complained about the board's independence and its 2016 decision to buy SolarCity, a money-losing solar power company backed by Musk and led by his cousin.

Outside the financial world, people have voiced concerns about the firm's autopilot features and workers have spoken out about abrupt dismissals and a discriminatory work environment.

Tesla has said the claims are without merit and its high public profile makes it a target. Several of the shareholder lawsuits have been dismissed.

But financial analysts are sounding warnings that the firm is losing ground against competitors. Share prices have sunk since June, though they remain about 25% higher than a year ago.

Surveys suggest the public remains enthusiastic about Tesla, though the issues may be having an effect.

A Harris Poll ranked the company's reputation third out of 100 American firms. But recent analysis by Netbase, which tracks social media posts, found Tesla compared poorly to other luxury brands.

"There's no question that the Tesla brand is a bit under fire," says Tim Calkins, a marketing professor at Northwestern University's Kellogg School of Management.

Belief in Tesla - and Musk - has helped the firm to fend off naysayers so far.

But Calkins warns the steady drumbeat of negative press threatens to erode that faith, just as the firm is trying to win over a wider audience.

"They've raised expectations of everybody really, and when you fall short of expectations, people forgive you for a while, if you're a brand they like," Calkins says.

"If you're Elon Musk, what you're counting on is that the future is so compelling that people are going to give you time."

For years, Musk has had a seemingly magical touch, defying doubts about his endeavours.

These also include rocket company SpaceX and Neuralink, which is looking at ways to meld human and computer intelligence.

BBC News


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