Tesla (TSLA) CEO Elon Musk said he wants to boost his ownership in the electric carmaker to 25 percent (from the current 13 percent) not because he wants to enrich himself or have total control over the company, but because he doesn’t want outside shareholders to sway major decisions.
During Tesla’s fourth-quarter earnings call yesterday (Jan. 24), Morgan Stanley’s transportation analyst Adam Jonas asked the CEO whether retail shareholders should be concerned about his recent X post saying that he would prefer to build A.I. and robotics products outside of Tesla unless he owns a quarter of the company.
“Let me explain why,” Musk replied. “I see a path to creating an artificial intelligence and robotics juggernaut of truly immense capability and power. And my concern would be…if I have so little influence over the company at that stage that I could be voted out by some sort of random shareholder advisory firm.”
Musk then called out Institutional Shareholder Services (ISS), the world’s largest shareholder advisory firm, or proxy advisor. These firms provide research-backed recommendations for investors on how they should vote at corporate shareholder meetings. ISS has created a lot of trouble for Tesla’s internal shareholders like Musk in recent years. The firm has advised Tesla shareholders to oust the CEO’s brother, Kimbal Musk, from the company’s board. It has also advised shareholders to vote against re-electing Robyn Denholm as Tesla’s board chairperson.
“I call them ISIS,” Musk said on yesterday’s call. “There’s a lot of activists that basically infiltrate those organizations and have strange ideas about what should be done. So, I want to have enough to be influential.”
Musk has floated the idea of implementing a dual-class stock structure, where holders of a special class of shares have superior voting rights to others. “If we could do a dual-class stock, that would be ideal,” he said yeterday. “I’m not looking for additional economics; I just want to be an effective steward of very powerful technology.” However, Musk said in his X post last week he’d been told it’s impossible for Tesla because it’s already a publicly traded company.
Musk added that he’s seeking a 25 percent stake because “that’s not so much that I can control the company even if I go bonkers. And if I’m, like, mad, they can throw me out, but it’s enough that I have a strong influence.”
Tesla’s core business, selling electric vehicles, is slowing. The company reported $25.17 billion in revenue and $7.93 billion in profit for the three months ended December 2023. Both results fell short of analyst estimates, sending Tesla stock down more than 12 percent today (Jan. 25). Tesla’s stock price is down more than 25 percent since the beginning of the year.