A group of Tesla shareholders is asking investors to vote against more than $40 billion in compensation for CEO Elon Musk, saying it is not in the electric vehicle maker’s best interests.
Tesla is grappling with declining global sales, slowing demand for electric vehicles, an aging model lineup and a stock price that has fallen 30% this year.
The shareholder group, which includes New York City Comptroller Brad Lander, SOC Investment Group and Amalgamated Bank, said in a letter to shareholders that ratifying Musk’s pay plan would do nothing to promote growth and Tesla’s long-term stability.
There are also concerns that approving the pay package could potentially lead to lawsuits arguing that it is corporate waste. And Musk is considered a part-time CEO at Tesla, with his time increasingly devoted to other business commitments, the letter said.
“Shareholders should not pretend that this reward has any incentive effect – it does not. What there is is a problem of excess, which has been clear from the beginning,” the group said.
They noted that if shareholders ratify the compensation package, it’s possible another plan could be proposed next year.
“Given Tesla’s history of exponentially larger awards, Musk may well seek another award,” the group said.
The group is also asking investors to vote against the re-election of board members Kimbal Musk, Elon’s brother, and James Murdoch, a former executive at media company Twenty-First Century Fox.
Last month, Tesla asked shareholders to reinstate Elon Musk’s pay package, valued at the time at $56 billion, which was thrown out by a Delaware judge this year. At the time, she also requested to move the company’s headquarters to Texas.
The changes will be voted on by shareholders at an annual meeting on June 13.
In a letter to shareholders published in a regulatory filing last month, Chairman Robyn Denholm said Musk had achieved the growth he sought at the automaker, with Tesla meeting all stock value and operational targets in the 2018 package that been approved. by the shareholders. Shares at the time were up 571% since the pay package began.
“Because the Delaware court questioned your decision, Elon has not been paid for any of his work for Tesla over the past six years, which has helped drive significant growth and shareholder value” , wrote Denholm. “This seems to us – and to the many shareholders we have already heard from – as fundamentally unfair and inconsistent with the will of the shareholders who voted for this.”
Tesla posted record deliveries of more than 1.8 million electric vehicles worldwide in 2023, but its stock value has rapidly eroded this year as electric vehicle sales slow.
The company said it delivered 386,810 vehicles from January to March, almost 9% fewer than what it sold during the same period last year. Future growth is uncertain and it may prove difficult to get shareholders to support high wages in an environment where competition has increased globally.
Since last year, Tesla has slashed prices by up to $20,000 on some models. The price cuts have driven down the value of used electric vehicles and reduced Tesla’s profit margins.
In April, Tesla announced it was laying off about 10% of its employees, or about 14,000 people.
ABC News
