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Tesla<\/a> shareholders will vote next week to ratify Musk\u2019s stock option grant for a second time after a judge rescinded the award in January<\/a>. The Delaware Chancery Court ruled that there was a lack of independence among directors and that improper negotiations took place between Musk and the board. Denholm, speaking on CNBC<\/a>, said she has been in discussions with Tesla\u2019s largest investors on a daily basis about the June 13 vote on Musk\u2019s pay in recent weeks.<\/p>\n However, on Thursday Denholm said she was directly addressing Tesla\u2019s cohort of retail shareholders. The independent board chair explained that the vote boils down to \u201cfairness to our CEO.\u201d Shareholders have benefited tremendously, she said, with Musk\u2019s leadership ushering in $735 billion in market value from 2018 to 2023. Employees, shareholders, and customers have all reaped rewards\u2014everyone except Musk himself, argued Denholm. The Tesla leader took \u201ca huge risk\u201d with the pay package, and had he not hit the milestones in the plan approved by investors in 2018, he would have not been paid a penny.<\/p>\n \u201cThat risk-reward is very important in Corporate America,\u201d said Denholm on CNBC. \u201cIt\u2019s very important from a reaching for the stars perspective if you like, or for Mars in this case.\u201d Ambitious goals and commensurate compensation are what drives innovation, and the stock options underlying Musk\u2019s pay package are \u201cvery well earned,\u201d said Denholm.<\/p>\n Not all shareholders are on board.\u00a0<\/p>\n New York City Comptroller Brad Lander and other investors met this week<\/a> to discuss the Tesla vote. The NYC retirement funds hold Tesla shares worth about $627 million and will vote against Musk\u2019s pay plan and the reelection bids of Kimbal Musk and James Murdoch. Musk\u2019s brother and Murdoch are too close to the Tesla CEO and so are other board members, said Lander.<\/p>\n \u201cA billionaire can\u2019t just have his brother and his besties be the ones to decide what rules they\u2019ll follow, what courts they\u2019ll listen to, and what rules they\u2019ll abide by,\u201d said Lander this week. Amalgamated Bank and half a dozen other Tesla investors have also indicated in a letter that they plan to withhold support for Musk\u2019s pay plan or the board members\u2019 election bids.\u00a0\u00a0<\/p>\n Tesla did not immediately respond to a request for comment. <\/p>\n According to Denholm, the board deliberated over what would happen if shareholders didn\u2019t approve Musk\u2019s pay and directors determined that a second vote with the additional disclosures the judge asked for was the best option. She admitted that it was possible the pay plan could be subject to another legal challenge even if investors approved it, but that it would be detrimental to shareholder primacy.<\/p>\n Plus, ratifying the prior plan rather than creating a new plan would cost investors more in the long run, said Denholm. The company already took a stock-based compensation charge of over $2 billion when the options were first granted. Today, that charge would be $25 billion. But aside from the cost, Denholm said Musk deserves to be paid for his work.<\/p>\n \u201cPut yourself in his shoes,\u201d she said. \u201cYou\u2019ve worked really hard, incredibly hard, over six years to lead the company through transformational growth\u201d that nobody thought was possible. After all that effort to hit the goals only to have the package overturned even after a deal was struck would be incredibly difficult to overcome.<\/p>\n \u201cHow would you feel?\u201d said Denholm.<\/p>\n<\/div>\nSubscribe to the Eye on AI newsletter to stay abreast of how AI is shaping the future of business. Sign up<\/a> for free.<\/div>\n