Tesla is acting 'family-owned,' Musk unfocused: NYC Comptroller

A group of Tesla (TSLA) shareholders are trying to encourage others to vote against Elon Musk's $56 billion pay package, saying Musk is distracted by the other companies he is running. The group wrote to shareholders, "Tesla is suffering from a material governance failure which requires our urgent attention and action." Brad Lander, one of the letter's signatories and New York City Comptroller, joins Market Domination to discuss the move.

Lander calls Musk's pay package "stratospheric" but explains that the bigger problem is the lack of independent board governance. The comptroller adds that shareholders did not have a meaningfully independent say on pay and that Tesla is "acting like a family-owned business."

"I'd like to see a Tesla CEO who is focused on Tesla, and that's not what we have," Lander says, detailing Musk's distractions, from SpaceX to X. He emphasizes that the CEO's focus should be expanding electric vehicles and making money for shareholders.

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This article was written by Gabriel Roy

Video Transcript

A group of Tesla shareholders are trying to encourage others to vote against Ceo Elon Musk, $56 billion pay package.

The group that consists of the Amalgamated Bank, so investment group and six other signatories, they say Musk is distracted by all the other companies.

He is running writing in a note to shareholders, quote, Tesla is suffering from a material governance failure which requires our urgent attention and action.

Joining us now is one of the letter signatories, Brad Lander, the New York City Comptroller and Brad.

Thank you for joining us here today.

Uh a big pay package for Elon Musk.

You take this away.

It's gonna make uh it's gonna make a big difference in the world's richest persons fortunes here.

Why did you sign this letter?

Well, first, thank you for that reporting.

You just heard that, you know, even amongst the largest companies, 22 23 million a year, this even if you average it over a decade, $5.6 billion stratospheric pay.

But really the bigger problem is lack of independent board governance.

That's why the Delaware Chancellory Court invalidated the pay package.

The board is supposed to be independent, the board is not, shareholders, did not have a meaningfully independent say on pay.

We have a corporate governance problem at Tesla.

It is acting like a family owned business when it's a publicly traded business.

What do you make of?

Um Musk's sort of either hinting or outright saying that if this doesn't get approved, he's gonna spend less time on Tesla than he does now.

And that perhaps some of the A I initiatives he's working on, he'll take to some of his other companies.

Look, I'd like to see a CEO at Tesla that is focused on Tesla and that's not what we have.

We have a CEO that's focused on spacex that's focused on X that seems to be focused on random politics.

What shareholders of Tesla want is for the board to make sure that the CEO of Tesla is focused on Tesla thinking about how we grow and expand evs and make money uh for shareholders by running Tesla and that's not what we're getting right now.

So if Trump's uh if Trump, excuse me, Freudian slip, uh if Musk's uh threat to Tesla shareholders is pay me $56 billion or I'll stop being a distracted CEO for your company.

Um Let's have the board say what we want is a CEO who is focused on helping Tesla succeed, Brad.

What do you think your odds of success are?

Uh Elon Musk has been counted down and out in various situations?

Over the years, over the decades and he's bounced back pretty strong and pulled some rabbits out of the hat there.

What do you think?

What do you think the odds of winning here are?

Well, look, I'll say, I don't, I mean, you know, this is not a, if Elon Musk wants to focus on Tesla have an appropriate uh compensation package and a board that provides appropriate shareholder governance just like shareholder capitalism provides for that would be fine what our odds are of winning on the package.

Look, uh you know, a lot of the stock is held by non independent shares holders.

Um So these are hard votes to win, but it is important for shareholders who believe in independent shareholder governance to raise their voice when there is not legitimate independence.

And let's be clear, it's very rare for a court to say that a corporate board failed to act with required independence.

That should be a wake up call to Tesla shareholders and I hope they'll join us in the vote.

So New York and the, and the funds that you oversee the pension funds uh that are in your purview have about 3.4 million shares of Tesla.

So we're talking about a stake worth over $600 million.

So one would think you would have some clout here.

Is there a circumstance in which you would sell?

You know, what, what would it take for you to say?

All right.

Enough is enough or, you know, do you have other sort of levers you can pull besides writing a letter?

Well, it's more than writing a letter.

We're voting, we're trying to lead a vote of shareholders against um uh this $56 billion executive compensation package that has already been overturned by the court.

That's what we're focused on right now.

We're trying to get other shareholders to say this is a moment for independent shareholder governance.

Here's how we can send a strong message.

So that's what I'm focused on for right now.

I hope other shareholders will join us in that vote.

Um And we'll see what happens afterwards.

Uh Brad, uh any other companies you have your eyes set on, you're in the position, you have the ability to be kind of an activist investor here.

Any anyone besides Tesla?

Well, we've been focusing on some other companies recently.

We uh focused recently at Exxon where they were also essentially taking legal action against their own shareholders.

Um You know, trying to call attention to that and getting shareholders to vote against the management recommendation.

Um You know, we didn't do that well uh at Blackrock, but we urge Blackrock shareholders not to vote for the Saudi Aramco Ceo to be on the board that is not consistent with Blackrock's decarbonisation commitments or the climate transition uh that we need.

Um You know, but I will say we had some great uh partnership wins earlier this year when JP Morgan, Chase and Citi and Roan of Canada uh agreed to move to asset financing ratios for clean energy.

So, shareholder engagement is a great way to make progress.

Sometimes we make it as we did at Chase City and R BC.

Sometimes we come up short as we did in the most recent float at Blackrock.

Hopefully at Tesla, we can help move in the right direction.

All right, we're gonna leave it there, but I really appreciate you stopping by here on a Friday afternoon ahead of the Memorial Day weekend.

Hope you have a great holiday.

Thanks for having me on.