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It would be disingenuous to tell investors that Elon Musk doesn’t really want voting control of Tesla.
At Tesla
TSLA
During an earnings call Wednesday after the electric car maker warned of slower growth next year, Mr. Musk was asked by an investor whether individual shareholders were concerned about his recent comments on voting rights management. Earlier this month, Musk said on X (formerly Twitter) that he was worried about Tesla’s growth as a leader in AI and robotics without a 25% voting stake in the company.
On Wednesday, Musk reiterated a bit of what he said in an earlier tweet, but with a bit of amplification to show how he really feels on the subject.
“I want to have enough to have influence. For example, it would be ideal if we could do dual-class stock,” Musk said. “I’m not looking for more economics. I just want to be an effective manager of a very powerful technology. And that’s why I roughly chose about 25%, even if I Because even if I get mad, I don’t have enough money to control the company. And if I get mad, they can kick me out because they have a lot of influence. That’s what I’m aiming for, to be strong. You have influence, but you don’t control it. If there’s a way to achieve that, that’s great.”
But his mention of wanting dual-class stocks is where Musk lets himself go.
As many tech investors already know, dual-class stock is typically issued at an IPO to allow founders to maintain voting rights in the company. Two recent examples of founders who held controlling shares via dual-class shares include Meta Platforms Inc.;
Meta
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It is controlled by co-founder Mark Zuckerberg and Snapchat’s parent company, Snap Inc.
snap
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It is managed by co-founders Evan Spiegel and Robert Murphy.
From 2017: Snap IPO boils down to one question. Do you trust Evan Spiegel?
Musk even admitted in a subsequent comment on the same tweet that he was considering the possibility of a dual class structure. “A dual-class voting structure would be fine to accomplish this, but I’ve been told it’s impossible to achieve post-IPO in Delaware,” he tweeted.
“He is trying to soft-pedal the reality that dual-class stocks are all about control,” Stephen Diamond, an associate professor at Santa Clara University School of Law, said in an email. Diamond said introducing a dual-class share structure so many years after an IPO is highly unusual and he has never seen it done before. “Such changes would likely require shareholder approval (other than Musk’s stock).”
Tesla went public in 2010 with Musk as CEO. He currently owns 12.93% of Tesla stock, according to FactSet. In 2022, Musk had to sell billions of dollars worth of Tesla stock to partially finance his acquisition of Twitter. In late 2021, he sold about $16 billion in stock to pay taxes, which at the time represented about 10% of Tesla’s stock.
Musk may have regrets about having to sell his stock in the past, and his comments could hint at some kind of showdown with Tesla’s board over compensation. unknown. Currently, his $55 billion compensation package, approved by Tesla’s board of directors, remains in litigation and awaits a decision in Delaware Chancery Court after being challenged in a shareholder lawsuit.
But Mr. Musk has also been dishonest about what he really wants. AI is a technology with many capabilities, and Musk has very strong opinions about its future. His bringing up this topic comes after a board-level discussion about Tesla’s future vision for AI and the use of AI in its products, as was the case at OpenAI’s board meeting last November. It is also possible that it indicates.
As with all things related to masks, there is always more to come. Investors will clearly be waiting to see whether Mr. Musk’s hopes for greater control over Tesla turn out to be anything more than a pipe dream.
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