1 00:00:00,120 --> 00:00:08,360 Speaker 1: Bloomberg Audio Studios, podcasts, radio news Caroline. 2 00:00:08,400 --> 00:00:13,200 Speaker 2: Tesla's board has made an unprecedented proposal for a compensation 3 00:00:13,360 --> 00:00:16,960 Speaker 2: package for its CEO, Elon Musk. The total ward value 4 00:00:16,960 --> 00:00:19,000 Speaker 2: could be up to one trillion dollars, but it is 5 00:00:19,079 --> 00:00:22,480 Speaker 2: set against mandatory targets that have a high bar. Both 6 00:00:22,520 --> 00:00:27,080 Speaker 2: operational and financial investors' shareholders are going to vote on 7 00:00:27,120 --> 00:00:30,840 Speaker 2: that package in November, but many of those shareholders still 8 00:00:30,840 --> 00:00:34,760 Speaker 2: have questions. To answer the questions, the chair of Tesla's board, 9 00:00:35,200 --> 00:00:38,200 Speaker 2: Robin Denholm, is with us. Thank you, Robin for your time. 10 00:00:38,760 --> 00:00:43,440 Speaker 2: This proposed package was about Tesla's long term goals as 11 00:00:43,520 --> 00:00:47,480 Speaker 2: much as it was about retaining Elon Musk. But why 12 00:00:47,560 --> 00:00:49,879 Speaker 2: is it so crucial to the board's mind that it 13 00:00:49,960 --> 00:00:54,000 Speaker 2: is Elon Musk that is able to get Tesla to 14 00:00:54,120 --> 00:00:54,680 Speaker 2: this future? 15 00:00:55,440 --> 00:00:58,400 Speaker 3: Well, thank you, Ed. I think it is a pivotal 16 00:00:58,440 --> 00:01:02,960 Speaker 3: time at Tesla and also in the world in AI 17 00:01:03,360 --> 00:01:09,840 Speaker 3: and autonomous and the application of AI is its transformative technologies, 18 00:01:10,160 --> 00:01:14,280 Speaker 3: and we believe it. Tesla in big ambitious goals, and 19 00:01:14,360 --> 00:01:18,400 Speaker 3: so Elon put out the master plan for on the 20 00:01:18,480 --> 00:01:21,839 Speaker 3: first of September, very auspicious day. I think in terms 21 00:01:21,920 --> 00:01:26,760 Speaker 3: of putting out the vision for the company for the 22 00:01:26,760 --> 00:01:30,840 Speaker 3: next decade or more, and AI and autonomous is at 23 00:01:30,880 --> 00:01:33,600 Speaker 3: the front and center of that, both in the vehicles 24 00:01:33,640 --> 00:01:37,720 Speaker 3: but also in our Optimus lineup and what we're doing 25 00:01:38,319 --> 00:01:44,160 Speaker 3: from a robotics perspective as well. And so having the 26 00:01:44,200 --> 00:01:47,720 Speaker 3: boards of responsibilities to look at who the CEO is 27 00:01:47,800 --> 00:01:50,640 Speaker 3: for the next period of time, and we believe that 28 00:01:50,720 --> 00:01:54,600 Speaker 3: Elon is the right CEO for Tesla over this transformative 29 00:01:54,640 --> 00:01:59,240 Speaker 3: period of time. And our view is he's a generational leader. 30 00:02:00,080 --> 00:02:02,960 Speaker 3: Aren't any other people out there like Elon who can 31 00:02:03,000 --> 00:02:06,720 Speaker 3: actually lead the company over this next decade or so, 32 00:02:07,280 --> 00:02:10,720 Speaker 3: And so once you decide who the leader should be, 33 00:02:11,240 --> 00:02:14,400 Speaker 3: you need to put in place a compensation package to 34 00:02:14,520 --> 00:02:19,360 Speaker 3: incent and motivate him to actually deliver against the ambitions. 35 00:02:19,360 --> 00:02:22,720 Speaker 2: The motivational piece is interesting in the course of the 36 00:02:22,760 --> 00:02:25,480 Speaker 2: proxy as you read it and negotiation plays out, doesn't 37 00:02:25,520 --> 00:02:28,320 Speaker 2: it seven or eight months, but that there were sticking 38 00:02:28,360 --> 00:02:30,680 Speaker 2: points on both sides. What were they. 39 00:02:30,720 --> 00:02:35,840 Speaker 3: Well, obviously in any discussion around the future of the company, 40 00:02:35,880 --> 00:02:38,720 Speaker 3: but also the future of an individual in terms of 41 00:02:38,760 --> 00:02:42,360 Speaker 3: what motivates them is very important to understand that. And 42 00:02:42,400 --> 00:02:45,959 Speaker 3: from a board perspective, from a special Committee perspective, as 43 00:02:45,960 --> 00:02:49,320 Speaker 3: we've outlined in the proxy, we had a very fullsome process. 44 00:02:50,000 --> 00:02:53,880 Speaker 3: We had more than ten meetings with Elon in terms 45 00:02:53,919 --> 00:02:58,639 Speaker 3: of understanding what were his motivations, what does he want 46 00:02:58,639 --> 00:03:01,120 Speaker 3: to do over this period of time. And having worked 47 00:03:01,120 --> 00:03:03,400 Speaker 3: with him now I've been on the board for eleven 48 00:03:03,480 --> 00:03:08,880 Speaker 3: years and Kathleen Wilson Thompson, now other amazing Special Committee member, 49 00:03:09,080 --> 00:03:11,639 Speaker 3: has also been working with him for the past six 50 00:03:11,760 --> 00:03:14,720 Speaker 3: or seven years as well, And so from our perspective 51 00:03:14,840 --> 00:03:18,639 Speaker 3: seeing him in the boardroom, but also understanding what motivates him, 52 00:03:18,840 --> 00:03:21,920 Speaker 3: it's things that other people can't do. It's what the 53 00:03:22,040 --> 00:03:25,040 Speaker 3: company could do that no other company could do. So 54 00:03:25,080 --> 00:03:27,840 Speaker 3: those types of things are what are in this plan. 55 00:03:28,200 --> 00:03:30,520 Speaker 3: And so, as you said in the outset, it is 56 00:03:30,560 --> 00:03:35,640 Speaker 3: a zero compensation package unless he delivers against pretty ambitious 57 00:03:35,720 --> 00:03:37,920 Speaker 3: goals for the company. 58 00:03:38,600 --> 00:03:42,440 Speaker 1: Ambitious goals that include twenty million vehicles, that include ten 59 00:03:42,520 --> 00:03:46,000 Speaker 1: million FSD that think about a million robots and robotaxes. 60 00:03:46,120 --> 00:03:49,280 Speaker 1: Robin tell us, from your experience with the twenty eighteen 61 00:03:49,320 --> 00:03:51,760 Speaker 1: pay package are in the investi base really wants to 62 00:03:51,840 --> 00:03:54,320 Speaker 1: understand how structurally this is different. 63 00:03:57,400 --> 00:04:01,040 Speaker 3: Yeah, So for us, the framework of the twenty eighteen 64 00:04:01,120 --> 00:04:06,160 Speaker 3: plan worked very very effectively, and so this package, this 65 00:04:06,680 --> 00:04:09,320 Speaker 3: framework that we've put in place for the twenty twenty 66 00:04:09,360 --> 00:04:16,080 Speaker 3: five proposed compensation package, has twelve tranches, twelve market cap goals, 67 00:04:16,520 --> 00:04:19,200 Speaker 3: where the top goal is eight and a half trillion 68 00:04:19,240 --> 00:04:22,240 Speaker 3: dollars and we're just over a trillion dollars today. The 69 00:04:22,279 --> 00:04:26,200 Speaker 3: first milestone on the market cap side is a two 70 00:04:26,279 --> 00:04:29,440 Speaker 3: trillion dollars, so we've got almost double the size of 71 00:04:29,480 --> 00:04:32,400 Speaker 3: the company before any of the market cap goals are 72 00:04:32,480 --> 00:04:36,080 Speaker 3: actually achieved. And then it increases by half a trillion 73 00:04:36,200 --> 00:04:39,240 Speaker 3: up into the last two tranches, where there's a trillion 74 00:04:39,279 --> 00:04:42,680 Speaker 3: dollar jump each time. And then on the operational side, 75 00:04:42,760 --> 00:04:46,800 Speaker 3: to your point, Caroline, they're very ambitious. We're just over 76 00:04:46,920 --> 00:04:51,560 Speaker 3: eight million cars that have been produced and delivered at Tesla. 77 00:04:52,279 --> 00:04:56,120 Speaker 3: The milestone on the vehicle side is twenty million vehicles, 78 00:04:57,480 --> 00:05:03,200 Speaker 3: ten million FSC paid subscription areas. So to me, these 79 00:05:03,240 --> 00:05:07,000 Speaker 3: are ambitious goals, and not to mention what we're what 80 00:05:07,040 --> 00:05:13,880 Speaker 3: we've proposed in terms of the goals around our robotics areas, 81 00:05:13,880 --> 00:05:18,320 Speaker 3: our optimists and bots a million of those and robotaxis 82 00:05:18,720 --> 00:05:22,080 Speaker 3: and so to me, it really brings the master plan 83 00:05:22,200 --> 00:05:26,080 Speaker 3: for to life within this compensation package. Because they're the 84 00:05:26,120 --> 00:05:28,760 Speaker 3: goals that Elon has, it's the goals that the company 85 00:05:28,880 --> 00:05:29,919 Speaker 3: has as well. 86 00:05:30,160 --> 00:05:34,200 Speaker 1: Some had worried that Elon's goals had turned more towards politics, 87 00:05:34,400 --> 00:05:37,240 Speaker 1: and you draw him back from that within the proxy, 88 00:05:37,520 --> 00:05:41,000 Speaker 1: and he's agreed to wind down his political activity. How 89 00:05:41,040 --> 00:05:44,320 Speaker 1: do you define political activity. 90 00:05:43,920 --> 00:05:51,240 Speaker 3: Robin, I think you know, from my perspective, this is 91 00:05:51,279 --> 00:05:55,760 Speaker 3: a package that really motivates Elon. So having him front 92 00:05:55,800 --> 00:06:00,360 Speaker 3: and center at the company and delivering against really ambitious goals, 93 00:06:00,600 --> 00:06:04,520 Speaker 3: to me, is great for him. It's great for the company. 94 00:06:04,680 --> 00:06:09,640 Speaker 3: It's also great for shareholders, and as we've outlined, the 95 00:06:09,680 --> 00:06:17,279 Speaker 3: shareholders in this proposal actually win very extensively with that 96 00:06:17,440 --> 00:06:20,520 Speaker 3: market cap at eight and a half trillion dollars in 97 00:06:20,600 --> 00:06:26,240 Speaker 3: order to achieve this compensation package. To me, that actually 98 00:06:26,400 --> 00:06:30,960 Speaker 3: is one of the things that all shareholders will benefit by. 99 00:06:31,480 --> 00:06:36,000 Speaker 3: And so from a politics perspective, obviously we're in a democracy, 100 00:06:36,080 --> 00:06:39,719 Speaker 3: so everybody gets to voice their points of view. I 101 00:06:39,760 --> 00:06:44,600 Speaker 3: think Elon having served as a special government employee, he 102 00:06:44,680 --> 00:06:50,000 Speaker 3: obviously completed that activity and he is back and front 103 00:06:50,000 --> 00:06:52,000 Speaker 3: and center at the company these days. 104 00:06:52,040 --> 00:06:54,679 Speaker 2: But did those reassurances go as far as to Elon 105 00:06:54,760 --> 00:06:59,120 Speaker 2: Musk agreeing not to specifically participate in any one political 106 00:06:59,160 --> 00:07:04,200 Speaker 2: party another government role extend to whether or not he 107 00:07:04,240 --> 00:07:06,239 Speaker 2: makes donations in a political cycle. 108 00:07:06,520 --> 00:07:09,480 Speaker 3: Yeah, I mean what he does from a personal perspective, 109 00:07:09,560 --> 00:07:14,360 Speaker 3: in terms of his political motivations, etc. Is up to him. 110 00:07:14,680 --> 00:07:17,840 Speaker 3: I mean, clearly from our perspective as a board, we're 111 00:07:17,880 --> 00:07:20,600 Speaker 3: measuring him on results and measuring him on what he 112 00:07:20,680 --> 00:07:26,600 Speaker 3: does as a CEO of Tesla and our viewers. He's 113 00:07:26,600 --> 00:07:29,680 Speaker 3: delivered big time in the past, and you know, we 114 00:07:29,720 --> 00:07:32,559 Speaker 3: look forward to him doing that in the next era. 115 00:07:32,800 --> 00:07:34,920 Speaker 2: Robin, you've just been unequivocal about the future of the 116 00:07:34,960 --> 00:07:38,800 Speaker 2: company and the inclusion of those operational milestones on Optimus 117 00:07:39,080 --> 00:07:43,880 Speaker 2: and Robotaxi. But when the proxy hit many many shareholders 118 00:07:43,920 --> 00:07:46,680 Speaker 2: went straight to the bullet point on the twenty million 119 00:07:46,800 --> 00:07:52,480 Speaker 2: vehicle deliveries. How much was that informed by the board 120 00:07:52,560 --> 00:07:54,800 Speaker 2: wanting Elon Musk to focus on the bread and butter 121 00:07:54,880 --> 00:07:57,520 Speaker 2: business in the near time. But also did you have 122 00:07:57,600 --> 00:08:02,679 Speaker 2: some data that sales specific were being impacted by Musk's 123 00:08:02,680 --> 00:08:03,600 Speaker 2: political activity. 124 00:08:03,840 --> 00:08:08,520 Speaker 3: Yeah, I would say that vehicles are our mainstay of 125 00:08:08,560 --> 00:08:11,560 Speaker 3: our business today, so is the energy business. A lot 126 00:08:11,560 --> 00:08:14,600 Speaker 3: of people forget about this brilliant business that we have 127 00:08:15,240 --> 00:08:19,440 Speaker 3: on the sustainable energy side, and so from our perspective, 128 00:08:19,440 --> 00:08:22,680 Speaker 3: from a board perspective, they are the revenue drivers of 129 00:08:22,720 --> 00:08:25,600 Speaker 3: the company in the near term. But obviously in the 130 00:08:25,640 --> 00:08:29,280 Speaker 3: plan you can see that there are other areas of 131 00:08:30,040 --> 00:08:35,000 Speaker 3: revenue activity and profitability and growth for the company in 132 00:08:35,080 --> 00:08:38,360 Speaker 3: what we're doing with AI as it relates to optimists, 133 00:08:38,360 --> 00:08:42,520 Speaker 3: but also FSD and beyond. And you know, we've put 134 00:08:42,600 --> 00:08:45,679 Speaker 3: pretty ambitious goals out there in terms of the EBITTER 135 00:08:46,160 --> 00:08:50,079 Speaker 3: and so I think, yeah, the profit in terms of 136 00:08:50,600 --> 00:08:55,079 Speaker 3: having four operational goals around product, but also four pretty 137 00:08:55,200 --> 00:09:00,600 Speaker 3: extensive six actually pretty extensive goals around the profitability of 138 00:09:00,640 --> 00:09:03,120 Speaker 3: the company as well. And you can't do that without 139 00:09:03,160 --> 00:09:06,400 Speaker 3: selling fabulous products that customers want. 140 00:09:07,200 --> 00:09:10,240 Speaker 1: Fabulous products that people have to want to buy, and 141 00:09:10,320 --> 00:09:13,120 Speaker 1: sometimes because of the brand of the person who built them. 142 00:09:13,600 --> 00:09:15,920 Speaker 1: I just ask a little bit again, did you think 143 00:09:16,000 --> 00:09:18,040 Speaker 1: sales were hit by his political activity? 144 00:09:21,000 --> 00:09:24,840 Speaker 3: So my view is over the long term, people buy 145 00:09:24,880 --> 00:09:29,800 Speaker 3: things that they really love, and Tesla vehicles things that 146 00:09:29,840 --> 00:09:33,959 Speaker 3: people really love. You know, it doesn't matter who you are. 147 00:09:34,160 --> 00:09:36,440 Speaker 3: The minute you get into a death Tesla and you 148 00:09:36,559 --> 00:09:40,080 Speaker 3: drive that car, you know what that experience is like. 149 00:09:40,480 --> 00:09:45,760 Speaker 3: And so from our perspective, focusing on products that customers love, 150 00:09:46,520 --> 00:09:50,160 Speaker 3: that our consumers are both in the vehicle space and 151 00:09:50,200 --> 00:09:54,720 Speaker 3: in the energy space, really do enjoy using and appreciate 152 00:09:54,960 --> 00:09:58,440 Speaker 3: in terms of not only the technology aspects, but also 153 00:09:59,160 --> 00:10:03,559 Speaker 3: how the vehicle responds, the user interface, those types of things. 154 00:10:03,600 --> 00:10:07,600 Speaker 3: So again, we're a products company. We love building things 155 00:10:07,640 --> 00:10:08,920 Speaker 3: that people love. 156 00:10:09,320 --> 00:10:11,760 Speaker 1: And we can see the future products just behind your 157 00:10:11,760 --> 00:10:15,080 Speaker 1: shoulder as well. With Optimists and Robin. What's been so 158 00:10:15,160 --> 00:10:18,160 Speaker 1: interesting is the push from Elon's side in the ten 159 00:10:18,200 --> 00:10:21,160 Speaker 1: times you met him and the negotiations and indeed on 160 00:10:21,440 --> 00:10:24,880 Speaker 1: X's platform to have more voting control and have more 161 00:10:24,960 --> 00:10:28,520 Speaker 1: ownership of shares. Can you tell us a little bit 162 00:10:28,520 --> 00:10:31,079 Speaker 1: about how you weigh that as a board and as 163 00:10:31,080 --> 00:10:31,520 Speaker 1: the chair. 164 00:10:34,480 --> 00:10:39,000 Speaker 3: Well, clearly Elon's been very public in terms of the 165 00:10:39,040 --> 00:10:45,280 Speaker 3: things that he motivates him and what actually he wants 166 00:10:45,880 --> 00:10:48,600 Speaker 3: over this next period of time. So as a special 167 00:10:48,679 --> 00:10:51,760 Speaker 3: committee as a board, that's actually easy to work with 168 00:10:51,880 --> 00:10:56,360 Speaker 3: because when you're designing a compensation package, you're looking for 169 00:10:56,400 --> 00:11:00,319 Speaker 3: the things that will motivate an individual to do thing 170 00:11:00,559 --> 00:11:06,200 Speaker 3: above and beyond the mainstay, and so clearly voting rights 171 00:11:07,800 --> 00:11:11,960 Speaker 3: important to Elon, particularly in this era as we're developing 172 00:11:12,040 --> 00:11:17,880 Speaker 3: products around artificial intelligence, autonomous those types of things where 173 00:11:17,960 --> 00:11:22,040 Speaker 3: we could use products for good as opposed to any 174 00:11:22,679 --> 00:11:26,040 Speaker 3: nefarious activity with the products, and so he's been very 175 00:11:26,080 --> 00:11:30,040 Speaker 3: clear on that, and so for us as a special committee, 176 00:11:30,080 --> 00:11:34,280 Speaker 3: taking that information and then working through what were the 177 00:11:34,400 --> 00:11:38,240 Speaker 3: right goals in order for him to earn those voting 178 00:11:38,320 --> 00:11:43,040 Speaker 3: rights is really important. And again I'll say again that 179 00:11:43,120 --> 00:11:46,320 Speaker 3: it's a zero plan if he doesn't achieve the goals, 180 00:11:46,640 --> 00:11:51,400 Speaker 3: So each charch is worth a one percent in terms 181 00:11:51,440 --> 00:11:56,560 Speaker 3: of voting rights. They kick in when he actually hits 182 00:11:56,800 --> 00:12:00,319 Speaker 3: the goals, both an operational goal as well as a 183 00:12:00,400 --> 00:12:04,800 Speaker 3: market cap goal, and then the economic benefits are delayed 184 00:12:05,280 --> 00:12:08,440 Speaker 3: beyond that period of time, which is a difference in 185 00:12:08,480 --> 00:12:11,920 Speaker 3: the plan that we structured in twenty eighteen. So bifurcating 186 00:12:12,200 --> 00:12:15,760 Speaker 3: the voting rights versus the economic benefit actually has a 187 00:12:15,840 --> 00:12:20,079 Speaker 3: huge retentive effect, and so from our perspective, that's one 188 00:12:20,120 --> 00:12:22,720 Speaker 3: of the key levers that we used in the plan. 189 00:12:23,559 --> 00:12:26,839 Speaker 2: You're joining us on Bloomberg television and radio around the world. 190 00:12:26,840 --> 00:12:29,400 Speaker 2: This is Bloomberg Tech Live at Tesla in Palo Alto, 191 00:12:29,440 --> 00:12:33,160 Speaker 2: where we're speaking with the chair of Tesla's board, Robin Denholm, 192 00:12:33,320 --> 00:12:37,360 Speaker 2: about the proposed compensation package for Elon Musk that investors 193 00:12:37,360 --> 00:12:41,440 Speaker 2: will vote on in November. In the proxy, again, it's 194 00:12:41,559 --> 00:12:43,760 Speaker 2: very clear if one is to go and read it 195 00:12:43,880 --> 00:12:49,520 Speaker 2: that Elon Musk essentially said to the special Committee that 196 00:12:50,080 --> 00:12:53,520 Speaker 2: my priority is the voting power. But you know, if 197 00:12:53,559 --> 00:12:56,840 Speaker 2: my motivations aren't met, I am interested to go and 198 00:12:56,840 --> 00:13:03,240 Speaker 2: pursue other interests. What was the kind of absolute for 199 00:13:03,280 --> 00:13:05,480 Speaker 2: the board on your side? You know, I'm trying to 200 00:13:05,600 --> 00:13:10,280 Speaker 2: understand both Caroline's question on you know, I think Musk 201 00:13:10,400 --> 00:13:12,960 Speaker 2: wants the voting power so that he can focus on 202 00:13:13,000 --> 00:13:16,079 Speaker 2: this AI future. But in return to hand over that 203 00:13:16,160 --> 00:13:19,400 Speaker 2: voting power, what is it, Robin, that you wanted to ensure? 204 00:13:19,720 --> 00:13:23,720 Speaker 3: Yeah? I think you know, as I said before, Alan's 205 00:13:23,760 --> 00:13:28,040 Speaker 3: a unique individual. He can apply his time, effort and 206 00:13:28,160 --> 00:13:33,000 Speaker 3: energy into different endeavors. He has different endeavors out there. 207 00:13:33,000 --> 00:13:36,240 Speaker 3: Of what the board sought to do through this plan 208 00:13:37,120 --> 00:13:40,959 Speaker 3: is to actually have him focus, you know, an outsized 209 00:13:41,000 --> 00:13:44,200 Speaker 3: proportion of his time, effort and energy on Tesla, because 210 00:13:44,520 --> 00:13:46,800 Speaker 3: when he does that, shareholders win. 211 00:13:46,960 --> 00:13:49,000 Speaker 2: Might I just add that what's kind of missing from 212 00:13:49,040 --> 00:13:52,839 Speaker 2: the proxy. It's not codified. But you are calm, sanguine, 213 00:13:52,920 --> 00:13:56,400 Speaker 2: comfortable with him also being the CEO at another company, 214 00:13:56,440 --> 00:14:00,600 Speaker 2: private company, or having another leadership position across multiple companies. 215 00:14:00,640 --> 00:14:02,720 Speaker 2: That's okay, Yes, it is okay. 216 00:14:02,760 --> 00:14:06,320 Speaker 3: It is how he's delivered in the past. And you know, 217 00:14:07,160 --> 00:14:14,040 Speaker 3: from our perspective, actually having his creative energies in various 218 00:14:15,000 --> 00:14:18,400 Speaker 3: endeavors that are outside of Tesla actually helps Tesla. Yes, 219 00:14:18,480 --> 00:14:22,320 Speaker 3: And now that sounds perverse and people don't really understand that, 220 00:14:22,360 --> 00:14:24,760 Speaker 3: but having worked with him now for eleven years, it 221 00:14:24,880 --> 00:14:28,080 Speaker 3: actually benefits Tesla with him doing things that are not 222 00:14:28,320 --> 00:14:32,280 Speaker 3: in the mission of Tesla outside of Tesla, both from 223 00:14:32,320 --> 00:14:37,520 Speaker 3: a resource perspective but also from a motivation perspective. And 224 00:14:37,560 --> 00:14:41,320 Speaker 3: so I think to really understand that point is to 225 00:14:41,520 --> 00:14:44,640 Speaker 3: understand Elon and how he actually works. And so that's 226 00:14:44,680 --> 00:14:47,880 Speaker 3: what the board sought to do through this plan Succession. 227 00:14:48,480 --> 00:14:52,880 Speaker 2: The latter tronches directly relate to Elon Musk's participation in 228 00:14:52,920 --> 00:14:56,880 Speaker 2: succession planning and the successful implementation of that succession planning. 229 00:14:57,400 --> 00:15:00,840 Speaker 2: You started this conversation by saying, there isn't any like 230 00:15:00,920 --> 00:15:04,360 Speaker 2: Elon Musk given that this is a decade long plan, 231 00:15:04,480 --> 00:15:07,960 Speaker 2: So maybe succession after a decade is more timely than 232 00:15:08,680 --> 00:15:11,280 Speaker 2: do you have confidence as aboard there are leaders already 233 00:15:11,400 --> 00:15:14,840 Speaker 2: within Tesla that could potentially step up when he's gone, 234 00:15:15,280 --> 00:15:17,920 Speaker 2: or are you already starting to speak with Elon Musk 235 00:15:17,960 --> 00:15:22,360 Speaker 2: about external candidates, those that are nearest to him, you know, 236 00:15:22,400 --> 00:15:25,640 Speaker 2: in that level of extraordinary ability that you see in him. 237 00:15:25,920 --> 00:15:29,840 Speaker 3: Yeah. So clearly, succession planning is a very important responsibility 238 00:15:29,840 --> 00:15:33,960 Speaker 3: for the board and we take that responsibility very seriously. 239 00:15:34,400 --> 00:15:37,320 Speaker 3: I meet with investors all the time, and I will 240 00:15:37,360 --> 00:15:40,400 Speaker 3: say it's probably my number one question that I get 241 00:15:40,920 --> 00:15:47,560 Speaker 3: in terms of consistency of feedback from investors around succession planning. 242 00:15:47,880 --> 00:15:51,960 Speaker 3: And so from our perspective, we obviously have a plan 243 00:15:52,040 --> 00:15:55,040 Speaker 3: if something untoward to it to happen in the near term, 244 00:15:55,320 --> 00:15:58,920 Speaker 3: but we also want to have and do have a 245 00:15:59,040 --> 00:16:04,800 Speaker 3: longer term succession plan. Now, this plan, this compensation plan, 246 00:16:04,960 --> 00:16:07,560 Speaker 3: is a ten year plan. Elon will be sixty four 247 00:16:07,680 --> 00:16:11,000 Speaker 3: or close to sixty five by the time this plan completes. 248 00:16:11,960 --> 00:16:15,560 Speaker 3: At some point he will want to ease back. Maybe 249 00:16:15,560 --> 00:16:17,960 Speaker 3: he doesn't believe that today, but at some point he 250 00:16:18,040 --> 00:16:20,440 Speaker 3: may want to do that. And so we want to 251 00:16:20,480 --> 00:16:23,360 Speaker 3: make sure that we have the right leaders in place 252 00:16:23,480 --> 00:16:26,560 Speaker 3: to do an orderly transition at some point in the future. 253 00:16:26,920 --> 00:16:30,120 Speaker 3: And so making that part of this plan was a 254 00:16:30,240 --> 00:16:34,760 Speaker 3: very deliberate activity, and obviously he was part of that 255 00:16:34,880 --> 00:16:38,000 Speaker 3: discussion as well, and he is part of the discussion 256 00:16:38,040 --> 00:16:41,840 Speaker 3: on an ongoing basis that the board has around succession planning, 257 00:16:42,120 --> 00:16:47,080 Speaker 3: the talent that we have. We have extraordinary talent inside 258 00:16:47,120 --> 00:16:51,360 Speaker 3: of Tesla, across many facets of the company, and so 259 00:16:51,760 --> 00:16:56,080 Speaker 3: making sure that we're continuing to develop those leaders but 260 00:16:56,240 --> 00:17:00,360 Speaker 3: also bringing in talent. And you know that's the other part. 261 00:17:00,720 --> 00:17:05,639 Speaker 3: It's in the report as well, and that Elon is 262 00:17:05,640 --> 00:17:09,320 Speaker 3: a talent magnet, particularly on the engineering side, that we 263 00:17:09,440 --> 00:17:14,480 Speaker 3: have extraordinary depth in the AI space, in the engineering space, 264 00:17:14,560 --> 00:17:18,679 Speaker 3: in the manufacturing space, and largely because he works with 265 00:17:18,720 --> 00:17:22,080 Speaker 3: them day in and day out. And so that's one 266 00:17:22,119 --> 00:17:24,919 Speaker 3: of the unique aspects to this and also one of 267 00:17:24,920 --> 00:17:28,280 Speaker 3: the unique aspects to the plan is to make sure 268 00:17:28,320 --> 00:17:32,840 Speaker 3: that we have that visible succession plan as we near 269 00:17:32,880 --> 00:17:36,560 Speaker 3: the end of this decade long compensation packet. 270 00:17:36,680 --> 00:17:38,880 Speaker 1: Robin, what you just said was really interesting, the fact 271 00:17:38,880 --> 00:17:41,680 Speaker 1: that there is a plan in place if something untoward 272 00:17:41,720 --> 00:17:43,960 Speaker 1: would happen. Can you spell out what that would look 273 00:17:44,040 --> 00:17:45,240 Speaker 1: like in the here and now? 274 00:17:47,840 --> 00:17:52,320 Speaker 3: No, I won't go into details here, but from my perspective, 275 00:17:52,880 --> 00:17:57,120 Speaker 3: it is a responsibility the board takes very seriously. And 276 00:17:57,440 --> 00:18:02,680 Speaker 3: you know Elon has participated in that. We have leaders 277 00:18:02,880 --> 00:18:07,320 Speaker 3: in geographies that run large portions of the organization. We 278 00:18:07,400 --> 00:18:11,679 Speaker 3: have a really extensive executive team, and as I said before, 279 00:18:11,840 --> 00:18:16,080 Speaker 3: Elon works very closely. He's a hands on leader both 280 00:18:16,119 --> 00:18:20,040 Speaker 3: in the engineerings places, but also across the board from 281 00:18:20,080 --> 00:18:22,000 Speaker 3: an operational perspective as well. 282 00:18:22,040 --> 00:18:24,160 Speaker 1: And I realized that was a sensitive question to ask, 283 00:18:24,200 --> 00:18:26,600 Speaker 1: and forgive me, I will ask another sensitive one because 284 00:18:26,600 --> 00:18:28,800 Speaker 1: it is a time of sensitivity. We've just had the 285 00:18:28,800 --> 00:18:31,119 Speaker 1: death of Charlie Kirk. We've had Musk himself on his 286 00:18:31,160 --> 00:18:35,200 Speaker 1: own platform X raising questions well about his own security 287 00:18:35,240 --> 00:18:36,720 Speaker 1: and the fact that he has focused on it. I 288 00:18:36,760 --> 00:18:39,199 Speaker 1: know it's something that you are focused on. What is 289 00:18:39,240 --> 00:18:41,840 Speaker 1: the view, baores view on terms of upping his own 290 00:18:41,840 --> 00:18:42,800 Speaker 1: security right now? 291 00:18:45,720 --> 00:18:51,120 Speaker 3: Yeah, so very tragic circumstances this week. I think there 292 00:18:51,160 --> 00:18:55,200 Speaker 3: isn't anybody in a boardroom that isn't touched by what's 293 00:18:55,240 --> 00:19:01,080 Speaker 3: happened with Charlie Kirk, and also you know, there have 294 00:19:01,119 --> 00:19:04,640 Speaker 3: been other incidents you know, in the executive world over 295 00:19:04,680 --> 00:19:08,240 Speaker 3: the last twelve months that I think every board stops 296 00:19:08,240 --> 00:19:13,240 Speaker 3: and thinks about security of their CEOs but also their 297 00:19:13,520 --> 00:19:17,679 Speaker 3: executive team. And it's no different at Tesla. We have 298 00:19:17,800 --> 00:19:21,040 Speaker 3: been focused as a board on inland security for many 299 00:19:21,119 --> 00:19:25,000 Speaker 3: years now. He's been very public and very much out there, 300 00:19:25,680 --> 00:19:29,280 Speaker 3: and so it is something that we takes it very seriously. 301 00:19:29,359 --> 00:19:33,560 Speaker 3: He takes it very seriously as well, and so so 302 00:19:34,200 --> 00:19:37,000 Speaker 3: again from a board perspective, it is something that we've 303 00:19:37,440 --> 00:19:38,800 Speaker 3: discussed at. 304 00:19:38,760 --> 00:19:41,399 Speaker 2: Length, Robin. There are a number of other proposals in 305 00:19:41,440 --> 00:19:45,080 Speaker 2: the proxy. One is a shareholder initiated proposal for Tesla 306 00:19:45,119 --> 00:19:48,920 Speaker 2: to invest in Extai. It is non binding. The board 307 00:19:48,960 --> 00:19:51,320 Speaker 2: doesn't take a position, but how does the board think 308 00:19:51,320 --> 00:19:54,719 Speaker 2: about it. For example, if investors would say no, we 309 00:19:54,800 --> 00:19:58,800 Speaker 2: don't want Tesla to make that investment, with the board 310 00:19:58,880 --> 00:20:00,760 Speaker 2: still look to pursue it independently. 311 00:20:01,400 --> 00:20:05,600 Speaker 3: So clearly there are sixteen proposals overall in the proxy. 312 00:20:06,119 --> 00:20:08,240 Speaker 3: I know we've spent quite a bit of time on 313 00:20:08,240 --> 00:20:13,040 Speaker 3: one important one on compensation, but the Xai proposal is 314 00:20:13,080 --> 00:20:15,920 Speaker 3: a shareholder proposal that has been put into the board. 315 00:20:16,200 --> 00:20:20,240 Speaker 3: We value our shareholders input and the reason why we 316 00:20:20,560 --> 00:20:23,320 Speaker 3: have not put a recommendation is we want to hear 317 00:20:23,359 --> 00:20:27,760 Speaker 3: from shareholders in terms of what their views are as 318 00:20:27,760 --> 00:20:33,080 Speaker 3: to whether or not we should make an investment in XAI. Well, 319 00:20:33,119 --> 00:20:35,560 Speaker 3: one thing I will say at the outset is there's 320 00:20:35,600 --> 00:20:40,040 Speaker 3: a lot of misunderstanding of AI in the marketplace. It 321 00:20:40,119 --> 00:20:43,680 Speaker 3: is not one thing, okay, it is a range of technologies. 322 00:20:43,720 --> 00:20:47,080 Speaker 3: What Tesla is doing today with AI is quite different 323 00:20:47,119 --> 00:20:51,840 Speaker 3: to what XAI does. XAI is working on fundamental areas 324 00:20:52,000 --> 00:20:56,800 Speaker 3: in AI, but it's also working on large language large 325 00:20:56,880 --> 00:20:59,960 Speaker 3: language models. That's not what Tesla's doing. As you can 326 00:21:00,080 --> 00:21:07,159 Speaker 3: and see behind me. With Optimists, we're taking real world 327 00:21:07,560 --> 00:21:12,560 Speaker 3: application of AI and putting it into physical products to 328 00:21:12,680 --> 00:21:18,240 Speaker 3: actually empower those products to do things. So with Optimists, 329 00:21:18,240 --> 00:21:21,840 Speaker 3: it's very visual. You can see what he does in 330 00:21:21,960 --> 00:21:26,760 Speaker 3: terms of visualizing things and then actually doing things. And 331 00:21:26,800 --> 00:21:28,879 Speaker 3: the same with the vehicle. So what we're doing with 332 00:21:28,960 --> 00:21:34,840 Speaker 3: AI within FSD is actually taking that visual data and 333 00:21:34,960 --> 00:21:37,719 Speaker 3: using that to drive the car. And so that's quite 334 00:21:37,760 --> 00:21:39,520 Speaker 3: different to what an XAI does. 335 00:21:39,720 --> 00:21:42,200 Speaker 2: Robin a very quick question, and then we will end 336 00:21:42,240 --> 00:21:46,000 Speaker 2: on the final proposal for the compensation package. This week, 337 00:21:46,040 --> 00:21:52,240 Speaker 2: Bloomberg reported an investigation about some fatal incidents where passengers 338 00:21:52,400 --> 00:21:56,479 Speaker 2: or those inside the vehicle had difficulty using the manual release. Now, 339 00:21:56,520 --> 00:21:58,159 Speaker 2: as you know, I drive a test a vehicle, You 340 00:21:58,200 --> 00:22:00,480 Speaker 2: drive a test a vehicle. All I want to ask 341 00:22:00,600 --> 00:22:03,320 Speaker 2: is the board aware of that reporting and will it 342 00:22:03,520 --> 00:22:07,040 Speaker 2: raise that issue with Elon And is Tesla looking at 343 00:22:07,040 --> 00:22:08,960 Speaker 2: the design of the door manual override. 344 00:22:09,080 --> 00:22:11,879 Speaker 3: So I can tell you that the board takes very 345 00:22:12,520 --> 00:22:19,040 Speaker 3: seriously any safety related reporting or any incidence of any 346 00:22:19,119 --> 00:22:22,760 Speaker 3: type globally in terms of what we look at. But 347 00:22:22,960 --> 00:22:25,919 Speaker 3: in the Tesla there is a manual override already, and 348 00:22:25,960 --> 00:22:29,120 Speaker 3: in fact it's been reported on that you can actually 349 00:22:29,720 --> 00:22:33,159 Speaker 3: manually open the door if there is a power event 350 00:22:33,280 --> 00:22:36,840 Speaker 3: or anything like that. So safety is our number one 351 00:22:38,320 --> 00:22:40,480 Speaker 3: factor in terms of what we're doing. 352 00:22:40,640 --> 00:22:43,200 Speaker 2: And Tesla ranks very highly on safety, very highly. 353 00:22:43,280 --> 00:22:47,520 Speaker 3: It's also why we're pursuing FSD because you know, just 354 00:22:47,600 --> 00:22:50,280 Speaker 3: in North America there are fifty thousand deaths on the road. 355 00:22:50,359 --> 00:22:53,840 Speaker 3: That's fifty thousand too many, and so and we know 356 00:22:54,000 --> 00:22:57,760 Speaker 3: with the data that we have for FSD that it's 357 00:22:57,920 --> 00:23:01,520 Speaker 3: actually safer than a human drive because of those fifty 358 00:23:02,080 --> 00:23:04,560 Speaker 3: ninety four percent of human error. So if you can 359 00:23:04,600 --> 00:23:08,800 Speaker 3: eliminate five percent of that, that's a lot of deaths 360 00:23:08,840 --> 00:23:12,080 Speaker 3: that you can avoid. And so again, safety is one 361 00:23:12,119 --> 00:23:17,280 Speaker 3: of our key priorities in any aspect of the business. 362 00:23:17,680 --> 00:23:22,720 Speaker 2: Let's end on this unprecedented proposal, and I'm going to 363 00:23:22,720 --> 00:23:26,520 Speaker 2: ask you this, what would happen if to Tesla if 364 00:23:26,560 --> 00:23:29,480 Speaker 2: Elon Musk left tomorrow, you know, in order to try 365 00:23:29,520 --> 00:23:34,080 Speaker 2: and help shareholders understand the board's motive here in keeping him. 366 00:23:34,480 --> 00:23:36,560 Speaker 2: But there was one specific question from our audience which 367 00:23:36,560 --> 00:23:39,920 Speaker 2: I really appreciated. Why does Elon need to be CEO? 368 00:23:39,960 --> 00:23:41,920 Speaker 2: Could he not take on a more technical role? 369 00:23:42,680 --> 00:23:46,840 Speaker 3: Well, that is contemplated in the package. Just like in 370 00:23:46,880 --> 00:23:51,040 Speaker 3: the twenty eighteen package. We want his service at the company. 371 00:23:51,320 --> 00:23:53,439 Speaker 3: He can be the CEO, but he can also be 372 00:23:53,960 --> 00:23:57,000 Speaker 3: in another role, whether it's Chief product officer or that 373 00:23:57,040 --> 00:24:01,359 Speaker 3: type of thing. We've contemplated that before. But to me, 374 00:24:01,480 --> 00:24:05,720 Speaker 3: I think the really key thing is that shareholders get 375 00:24:05,760 --> 00:24:09,320 Speaker 3: to vote on the future of the company, not just 376 00:24:09,400 --> 00:24:13,440 Speaker 3: on a compensation package. The compensation package is the instantiation 377 00:24:13,640 --> 00:24:17,280 Speaker 3: of the goals and ambition, the super ambitious goals that 378 00:24:17,320 --> 00:24:20,280 Speaker 3: we have as a company, and so I think with 379 00:24:20,400 --> 00:24:24,640 Speaker 3: this proposal, it's really up to shareholders what the future 380 00:24:24,680 --> 00:24:25,919 Speaker 3: of Tesla looks like. 381 00:24:27,080 --> 00:24:30,800 Speaker 2: Robin Denholm, chair of Tesla's board. There is a key 382 00:24:31,040 --> 00:24:34,000 Speaker 2: shareholder vote in November on what is We've said it 383 00:24:34,080 --> 00:24:38,400 Speaker 2: an unprecedented proposal on a compensation package for elam Musk, 384 00:24:38,480 --> 00:24:43,200 Speaker 2: set against very high bar deliverables. But what a conversation 385 00:24:43,280 --> 00:24:47,040 Speaker 2: Caroline to inform the understanding of some of those deliverables.