Yahoo Finance Tesla Shareholder Group Slams Elon Musk’s $56 Billion Pay Package
(Bloomberg) -- A coalition of Tesla Inc. shareholders is urging its peers to reject the $56 billion pay package for Chief Executive Officer Elon Musk that the company’s board has asked investors to approve again.
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Tesla Shareholder Group Slams Elon Musk’s $56 Billion Pay Package
Amalgamated Bank, SOC Investment Group and six other signatories that hold a small portion of Tesla stock said Musk is distracted by his commitments to the five other companies he controls and isn’t serving the carmaker’s best interests. The group also urged shareholders to vote against the reelection of directors Kimbal Musk — Elon Musk’s brother — and James Murdoch.
“Tesla is suffering from a material governance failure which requires our urgent attention and action,” the group wrote in a letter to shareholders on Monday.
Musk’s pay package, which shareholders first approved in 2018, granted the CEO equity awards as Tesla’s market capitalization increased and as it hit certain operational targets. While the company met all the conditions for Musk to receive the full payout of stock options, a Delaware judge voided the deal in late January, saying it was unfair to shareholders who weren’t fully informed of key details.
Tesla’s board is putting the pay package to a vote for a second time to prove investors still support the award. It’s been urging investors to ratify Musk’s pay package and has hired a strategic adviser to boost retail investor participation. The company has scheduled its annual meeting for June 13.
Read More: Tesla Courts Retail Investors for Musk’s $56 Billion Pay Package
Many signatories of Monday’s solicitation published a separate open letter to Tesla’s board more than a year ago, expressing concerns about Musk’s many commitments and asking for a meeting with board chair Robyn Denholm. She never responded, the group said.
Musk’s decision to buy Twitter, now called X, has “played a material role in Tesla’s underperformance,” the shareholders said. They note that one of the board’s stated reasons for the magnitude of the CEO pay award was to keep Musk focused on the company’s long-term success.
“If this was one of the primary reasons for the 2018 pay package, then it has been an abysmal failure, as six years later Musk’s outside business commitments have only increased,” the shareholders wrote. Musk founded another startup last year, called xAI, that has hired away artificial intelligence specialists from Tesla.
Tesla’s shares rose 2.1% at 9:36 a.m. Tuesday in New York. They slumped 30% this year through Monday’s close.
Read More: Chaos Reigns Inside Tesla as Workers Await Next Slew of Job Cuts
The coalition of shareholders also raised concerns in their letter about how Tesla’s sales have trended and its disappointing first-quarter results.
“Even as Tesla’s performance is floundering, the board has yet to ensure that Tesla has a full-time CEO who is adequately focused on the long-term sustainable success of our company,” the group said.
(Updates with share trading in the ninth paragraph.)
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