A group of Tesla shareholders has asked investors to vote against a more than $40 billion compensation package for CEO Elon Musk, saying it is not in the electric car maker’s best interest.
A group of Tesla shareholders has asked investors to vote against a more than $40 billion compensation package for CEO Elon Musk, saying it is not in the electric car maker’s best interest.
Tesla is struggling with declining global sales, slowing demand for electric vehicles, an aging model range, 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 package would do nothing to boost Tesla’s long-term growth and stability.
There are also concerns that approval of the pay package could spark lawsuits arguing it is corporate waste. The letter said Musk is viewed as a part-time CEO at Tesla, increasingly spending his time on other business commitments.
“Contributors should not pretend that this award has any kind of incentive effect – it does not. What it suffers from is a problem of redundancy, which has been glaringly obvious from the beginning,” the group said.
They noted that if shareholders approve the compensation package, another plan could be introduced next year.
“Given Tesla’s history of receiving significantly larger awards, Musk may ask for 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 take back Musk’s pay package, which was worth $56 billion at the time, which a Delaware judge rejected this year. At that time, it also requested that the company’s headquarters be moved to Texas.
The changes will be voted on by shareholders at the annual meeting on June 13.
In a letter to shareholders released in a regulatory filing last month, Chairman Robin Denholm said Musk had achieved the growth he was looking for in the automaker, with Tesla meeting all stock value and operational targets in a 2018 package approved by shareholders. Shares have then risen 571% since the pay package began.
“Because the Delaware court disagreed, Elon was not compensated for any of his work for Tesla over the past six years, which helped create significant growth and shareholder value,” Denholm wrote. “This strikes us — and many of the shareholders we have already heard from — as fundamentally unfair, and inconsistent with the will of the shareholders who voted for it.”
Tesla posted record deliveries of more than 1.8 million electric vehicles worldwide in 2023, but the value of its shares has eroded rapidly this year as electric vehicle sales decline.
The company said it delivered 386,810 vehicles from January to March, about 9% fewer than it sold in the same period last year. Future growth is in doubt and it may be difficult to convince shareholders to support a large pay package in an increasingly competitive environment around the world.
Starting last year, Tesla cut prices by up to $20,000 on some models. Price cuts caused the value of used electric cars to decline and squeezed Tesla’s profit margins.
In April, Tesla said it would let about 10% of its workers go, or about 14,000 people.
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