On November 5, according to the Wall Street Journal, when Elon Musk left the U.S. Government Efficiency Department in May this year, Tesla investors hoped that the long-term leader could return to the company's headquarters as soon as possible to focus on reversing the decline in car sales and revitalizing the company's business. For much of this summer, however, he was immersed in another venture.
Musk
xAI
According to former executives and people who have worked with Musk, he has focused his energy on his latest startup, xAI.Trying to catch up in the AI race. Musk’s meetings with his employees often last until the early hours of the morning, and they brainstorm together on how to make their chatbot Grok popular.
He personally oversaw the design of a "bold" AI companion called Ani, the latter is an anime character with a blond ponytail and revealing clothing. Employees are asked to provide biometric data that is used to train avatars like Ani. Musk would spend long hours relaxing in his office playing his favorite video game, Diablo. He also has to take care of his children, who move in and out of the office building.
Musk personally supervised the design of the AI companion
At one point, Musk was spending so much time at xAI that he started holding meetings with Tesla employees there.
For years, the 54-year-old billionaire has balanced managing multiple high-growth companies, including X and SpaceX, with his role as CEO of Tesla. As the potential benefits in the AI field were gradually snatched away by competitors, especially Sam Altman of OpenAI, Musk began to devote more time to xAI.
Tesla investors dissatisfied
In recent weeks, some of Tesla's major investors have privately pressured company executives and board members to question how much Musk invests in Tesla and whether the company has a CEO succession plan. Last week, an unusually large delegation of Tesla board members, including Chairman Robyn Denholm, former Chipotle CFO Jack Hartung and Tesla co-founder JB Straubel, met with big investors in New York to lobby for Musk's new compensation package.
On Thursday, Tesla will announce the preliminary results of a shareholder vote on Musk's massive compensation package. The plan is designed to ensure Musk focuses on growing the company in the coming years. If Musk can meet the ambitious goals set out in his compensation package, his stake would increase from about 15% to about 25% within a decade, equivalent to potentially $1 trillion in stock. Those goals include selling 1 million robots like the humanoid Optimus and increasing its market value to $8.5 trillion from about $1.5 trillion currently.
Denhomme said in an interview last week that the board doesn't care how Musk spends his time."Other CEOs might like to play golf," she said, "but he doesn't play golf. He likes to build companies, and those companies are not necessarily Teslas."
She said some of Musk's pursuits are best pursued outside Tesla and that he must invest "time, energy and effort" in Tesla to achieve the goal of unlocking his compensation package.
In meetings with large investors, Denhomme and other Tesla directors admitted they could not force Musk to work for Tesla full-time and said his focus on AI would ultimately benefit Tesla because it is developing several technologies that leverage AI.Shareholders will also vote on whether Tesla should invest in xAI, something Musk has publicly supported.
Earlier this year, Musk merged xAI and X. As xAI launches avatars and Musk advances plans to build a massive data center in Memphis, the company decides to raise billions of dollars in new funding.
xAI’s AI data center in Memphis
Earlier this summer, Space invested about $2 billion in xAI. Musk then revisited an idea he had previously floated: Should Tesla be involved?
According to people familiar with the matter,Some large investors expressed skepticism about investing in xAI in discussions with Tesla directors.Tesla’s board of directors did not give any advice on the xAI proposal.
dissenting voices
Tesla's board of directors proposed a huge compensation package for Musk in its proxy statement submitted in September, which mentioned xAI 47 times.
Tesla's board of directors has made it clear that they believe the company cannot afford to lose Musk and that a huge compensation package is necessary to keep him focused on Tesla.
Two influential proxy advisory firms recommended Tesla shareholders vote against the proposal, arguing it would give Musk an outsized stake. They also recommended opposition to Tesla's proposed investment in xAI.
Tesla said the compensation plan suggestions were misleading, and Musk also hinted that he was tired of the matter.In response to a recent post on X criticizing his compensation package, Musk responded: "Tesla is worth more than all other car companies combined. Which CEO do you want running Tesla? It won't be me."