A group of Tesla investors is urging shareholders to oppose a proposed $46 billion compensation plan for CEO Elon Musk, saying it is not in the electric vehicle maker’s best interests.
Tesla currently faces challenges including declining global sales, low demand for electric vehicles, an aging range of models and a significant 30 percent decline in its stock price this year.
The group, led by New York City Comptroller Brad Lander, called on fellow Tesla shareholders to vote against Musk’s compensation and the re-election of two board members. They argue that the board’s close ties to Musk have compromised their ability to fairly assess the compensation package.
Why don’t Tesla shareholders want to be paid for Elon Musk?
Concerns have been raised that approving Musk’s pay could lead to a lawsuit over allegations of corporate waste. Musk is regarded as a “part-time CEO”, as he is increasingly involved in other business ventures. group letter,
“Shareholders should not pretend that this award has any kind of incentive effect – it does not,” he said. What it does contain is a profound problem, which has been abundantly clear from the beginning.
Additionally, the letter references a 2018 observation by Institutional Shareholder Services (ISS) that the pay package was designed to ensure Musk’s commitment to Tesla over ten years. However, the group criticized this intention as an “abject failure” in view of Musk’s increasing outside business engagements.
The letter also warned that shareholder approval of the compensation could prompt a similar or larger awards proposal next year.
Shareholders are also advocating for a vote against the re-election of board members Kimbal Musk, Elon’s brother, and James Murdoch, a former 21st Century Fox chief.
Last month, Tesla urged shareholders to reinstate Musk Rejected salary package, valued at $56 billion, and will consider relocating the company’s headquarters to Texas. Judge Kathleen McCormick in Delaware called the compensation an “immeasurable sum”, ruling that he “failed” to prove that it was fair. Musk pinned a post from Tesla on X, which he also owns, and urged Tesla shareholders to give him $50 billion in retroactive pay.
We’ve put forward two particularly important proposals for our annual meeting of stockholders – and we need your vote.
Protect your rights as a stockholder and protect the value of your investment by voting for the ratification and reincorporation of the 2018 CEO Performance Awards… pic.twitter.com/ONmB7oZfyM
– Tesla (@Tesla) 20 May 2024
These proposals will be decided at Tesla’s annual shareholder meeting to be held on June 13.
In a regulatory filing last month, chairperson Robin Denholm claimed Musk had achieved growth and met all operating and stock price targets specified in a 2018 compensation package that was approved by shareholders. Since the introduction of that package, Tesla shares have risen by 571 percent.
Tesla also left his post As the top global electric vehicle provider in the last quarter of 2023.
Featured Image: Canva / steve jurvetson /Debbie Rowe/ Royal Society
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