A group of Tesla shareholders, including New York City Comptroller Brad Lander, SOC Investment Group, and Amalgamated Bank, are urging investors to vote against a compensation package for CEO Elon Musk worth more than $40 billion. They argue that ratification of the pay package would not benefit Tesla’s long-term growth and stability, especially considering the company’s struggles with falling global sales, slowing electric vehicle demand, and a declining stock price. Additionally, there are concerns that approving the package could lead to potential lawsuits claiming corporate waste, as Musk is seen as a part-time CEO with increasing commitments to other business ventures.
The shareholder group believes that approving this compensation package would not have any incentivizing effect on Musk, but rather presents an issue of excessiveness. With the possibility of Musk requesting even larger awards in the future, shareholders are advised to vote against the re-election of board members Kimbal Musk and James Murdoch in an effort to prevent further excessive compensation packages. Tesla had previously asked shareholders to restore Musk’s pay package, valued at $56 billion, that was rejected earlier by a Delaware judge. These proposed changes will be voted on at the annual meeting scheduled for June 13.
In a letter to shareholders, Chairperson Robyn Denholm defended Musk’s previous compensation package, stating that he had delivered the growth Tesla was looking for by meeting stock value and operational targets. Denholm argued that Musk had not been paid for his work over the past six years, which helped generate significant growth and shareholder value, due to the rejection of his previous pay package. Despite Tesla posting record deliveries of over 1.8 million electric vehicles worldwide in 2023, a decline in share value has raised doubts about future growth, shareholder backing of a large pay package, and increased competition in the electric vehicle market. Tesla recently cut prices on some models by as much as $20,000, leading to decreased used electric vehicle values and lower profit margins, resulting in about 10% of its workforce being laid off in April.
With Tesla facing challenges such as falling sales, declining stock prices, and increased competition in the EV market, the shareholder group is urging investors to vote against Elon Musk’s $40 billion compensation package. Concerns have been raised about the excessiveness of the proposed pay package and the potential for Musk to request even larger awards in the future. The rejection of Musk’s previous pay package by a Delaware judge has sparked debate among shareholders, with Chairperson Robyn Denholm defending Musk’s contribution to Tesla’s growth. However, questions remain about Musk’s dual CEO role and allocation of time to other business ventures, prompting calls to vote against the re-election of certain board members in order to prevent further excessive compensation for Tesla executives. Shareholders will have the opportunity to voice their opinions on these matters at the upcoming annual meeting on June 13.
