A group of Tesla shareholders has voiced strong opposition to CEO Elon Musk’s $46 billion pay package, citing concerns over the company’s performance and governance. The group, which includes New York City Comptroller Brad Lander and investors such as Amalgamated Bank, AkademikerPension, Nordea Asset Management, SOC Investment Group, and United Church Funds, has urged other shareholders to vote against the pay package and the reelection of board members Kimbal Musk and James Murdoch.
The group’s letter to shareholders criticizes the Tesla board for being overly beholden to CEO Musk and lacking the critical and independent thinking required for effective governance. They argue that the board’s close personal ties to Musk, coupled with excessive director compensation, have led to a material governance failure that requires urgent attention and action.
The shareholders’ opposition comes in the wake of a court ruling in January 2024 that nullified Musk’s pay package, which was originally approved by Tesla shareholders in 2018. Delaware Court of Chancery Judge Kathaleen McCormick ruled that the pay plan was unfair to Tesla shareholders and must be rescinded. The judge found that most of Tesla’s board members were beholden to Musk or had compromising conflicts and that the board had provided false and misleading information to shareholders before the 2018 vote.
In response to the court ruling, Musk and the rest of the Tesla board asked shareholders to approve a transfer of Tesla’s state of incorporation from Delaware to Texas and to reinstate Musk’s pay package. Votes can be submitted before Tesla’s annual meeting on June 13.
The shareholder group opposing the pay package has also expressed concerns about Tesla’s performance. They note that Tesla’s share price has fallen significantly from its peak, and the company has lagged behind its competitors and the broader market over the past three years. They attribute this underperformance to distractions caused by Musk’s many projects, including his decision to buy Twitter.
The group’s letter also highlights the harm done to Tesla’s reputation by Musk’s public fights with regulators, his acquisition of Twitter, his controversial statements, and his legal and personal troubles. They argue that Musk has taken advantage of lax oversight to use Tesla as a coffer for himself and his other business endeavors.
Read more: arstechnica.com