Tesla Board encouraged to “find ways to reward Elon Musk” by Jefferies

A recent note from Jefferies has stated that Tesla’s (NASDAQ:TSLA) Board of Directors must “find ways to reward Elon Musk as a tech innovator.” In their note, the Jefferies analysts highlighted that Musk’s attention is divided, as he is involved in several companies. This, the analysts noted, could adversely affect Tesla. 

“The challenge for the Board will be to devise compensation schemes that reward achieving milestones in technology innovation, including separation or spin-off of activities when needed, and ensuring the sustainability of operating performance,” the Jefferies analysts wrote. 

The Jefferies analysts also noted that while Musk has strengths in driving technological advancements, the CEO has shown a tendency to lose interest as his businesses see more competition, as noted in a Yahoo! Finance report. Such sentiments may be quite strange considering that Musk has led Tesla through its most challenging times, including those when the company has come close to bankruptcy. 

“His reluctance to delegate leadership and responsibilities undermines execution, at least at Tesla… Unlike Tesla, businesses like SpaceX and Starlink operate in environments where competition is limited for now,” the Jefferies analysts noted. 

The analysts also shared their thoughts on Tesla’s upcoming 2024 Annual Stockholders’ Meeting. As per the analysts, if TSLA shareholders reject the company’s proposal to ratify Musk’s 2018 compensation plan, it would reflect “misplaced buyer’s remorse,” considering that the plan saw significant approval from TSLA shareholders when it was initially passed six years ago. 

Tesla has been putting in a lot of effort to encourage TSLA shareholders to vote for Proposals Three and Four in the 2024 Annual Stockholders’ Meeting. Proposal Three concerns Tesla’s proposed reincorporation from Delaware to Texas, and Proposal Four involves the ratification of Elon Musk’s 2018 CEO Performance Award. 

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