Why Musk is tied to Tesla
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If Tesla loses its momentous shareholder vote on CEO Elon Musk's $56 billion pay package on Thursday — an outcome that's entirely possible — then Musk will suffer a very bruised ego. Don't expect him to leave the company, however.
Why it matters: Musk is Tesla's largest shareholder, which gives him roughly 75 billion reasons to root for the stock's continued health.
- On top of that, Austin-based Tesla lies at the heart of Musk's web of companies. Were Musk to leave the carmaker, that would cause serious damage to the rest of his $200 billion fortune.
The big picture: Musk uses Tesla engineers at X and reportedly uses Tesla's AI chips wherever in his empire he wants to redirect them.
- More broadly, as Musk's only public company, Tesla gives Musk a degree of liquidity and funding that he can't find anywhere else in his empire.
Between the lines: Tesla chair Robyn Denholm has told shareholders that the pay award — which was deemed illegal by a Delaware court — is necessary "to keep Elon focused on Tesla." But it's not entirely clear that shareholders actually want Musk focused on Tesla.
- After all, another of his companies, SpaceX, has become hugely valuable while largely running itself and taking up a relatively small slice of Musk's attention.
- Tesla, on the other hand, is struggling. Its Supercharger team was laid off in April, and Cadillac's Lyriq EV is set to outsell Tesla's Model X this year.