A group of Tesla shareholders is pushing back against a $56 billion pay package for CEO Elon Musk, calling it excessive and harmful to the company. This compensation, initially approved in 2018, is up for a re-vote on June 13 after a Delaware court invalidated it in January for not providing shareholders with enough information.
Shareholders’ Concerns:
- Distraction by Other Ventures: Shareholders, including Amalgamated Bank and SOC Investment Group, argue that Musk is too occupied with his other businesses, such as SpaceX, Neuralink, The Boring Company, and his recent purchase of Twitter, now called X.
- Governance Failures: They believe Tesla’s board has not adequately managed Musk’s divided focus, leading to poor corporate governance.
- Negative Impact on Performance: They contend that Musk’s acquisition of Twitter has significantly contributed to Tesla’s underperformance.
- Excessive Pay: The group argues that the pay package is unnecessarily large and does not effectively incentivize Musk.
The coalition also calls for shareholders to vote against the reelection of board members Kimbal Musk, Elon’s brother, and James Murdoch, citing their failure to oversee Musk’s activities properly.
Tesla’s Board Stance: Tesla’s board argues that the compensation plan is tied to the company’s performance and operational achievements. They believe it aligns with the company’s long-term goals and have been actively encouraging shareholders to support the package again.
As the meeting approaches, the board has launched a website and video campaign to rally investor support for the compensation plan and the reelection of the contested board members.
This vote comes at a critical time for Tesla, with increased competition and fluctuating sales. Shareholders are emphasizing the need for a CEO fully committed to Tesla’s future success.
