Elon Musk’s self-serving deployment of DOGE rattled our democracy, destroyed vital services and livelihoods, and inspired the catchy song “Hostile Government Takeover.” Tesla’s annual shareholder meeting on November 6 will be another flashpoint in the world’s richest billionaire’s attempt to consolidate power over the economy and the rest of us.
Trillion-dollar payday
The most outrageous, headline-grabbing item on the Tesla ballot for shareholders is the proposed $1 trillion pay package for Musk. Trillion … or one thousand billions. That’s many, many times larger than the pay packages of the highest-paid CEOs.
Money at that scale is simply about raw power, and the pay package in no way restricts his political activities or requires him to stick to his knitting at Tesla (one of the purported justifications for making Musk a trillionaire). He would remain free to become distracted by chainsaws, implanting computer chips in monkeys, or whatever suits his trillionaire fancy that particular week.
Entrenching corporate power
But there are other important issues on the shareholder ballot related both to Musk’s pay and to a broader effort to consolidate power over corporate decision-making, our economy, and our lives in the hands of just a few corporate insiders like Musk.
Musk played a big role in triggering a race to the bottom in state corporate law that is increasing the power of corporate insiders while decreasing the ability of shareholders like pensions to hold them accountable for self dealing, outrageous CEO pay, and other corporate chicanery. Last year, a Delaware judge invalidated Musk’s previous $56 billion Tesla pay package, calling it “an unfathomable sum.” Musk went on the attack, derided her and Delaware corporate law, and reincorporated Tesla in Texas. Delaware, Texas, and Nevada have all weakened their corporate laws to tilt them in favor of a small group of insiders at the expense of regular shareholders.
Shareholders trying to overturn near immunity from corporate wrongdoing
Two Tesla proposals are trying to restore shareholder rights over corporate oversight after Texas changed its laws since Tesla’s relocation. One Texas law allows companies to change their rules to require shareholders to own at least 3 percent of the company’s stock before they can bring lawsuits against corporate insiders for wrongdoing that harms the company.
Tesla amended its corporate bylaws under the new Texas law to effectively immunize itself from shareholder lawsuits. Owning 3 percent may not seem like a high threshold, but an investor or group of investors would need to own over $40 billion worth of Tesla shares to challenge corporate misdeeds. This might explain why shareholders haven’t brought suits against Musk for negatively impacting Tesla’s reputation and brand through his political activities.
And the investor who successfully challenged Musk’s $56 billion pay package only had 9 Tesla shares. If that 3 percent ownership threshold continues to stand, it would be essentially impossible to challenge his $1 trillion pay package — even though it is nearly 18 times bigger. One Tesla shareholder proposal would repeal this bylaw change so shareholders can regain this avenue for corporate accountability.
