A group of Tesla shareholders are asking investors to vote against a compensation package worth more than $40 billion for CEO Elon Musk, saying that it’s not in the electric vehicle maker’s best interest.
A Tesla electric vehicle charges at a Tesla Supercharger location in Santa Monica, California on May 15, 2024. After laying off hundreds of employees on Tesla’s Supercharging team, Elon Musk posted on X that Tesla will spend over $500M expanding the Supercharger network. (Photo by Patrick T. Fallon / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)
Tesla is struggling with falling global sales, slowing electric vehicle demand, an aging model lineup and a stock price that has tumbled 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 ratification of Musk’s pay package would do nothing to promote Tesla’s long-term growth and stability.
There’s also concern that approval of the pay package will potentially lead to lawsuits arguing that it is corporate waste. And Musk is viewed as a part-time CEO at Tesla, with his time increasingly being spent on other business commitments, the letter said.
“Shareholders should not pretend that this award has any kind of incentivizing effect—it does not. What it does have is an excessiveness problem, which has been glaringly apparent from the start,” the group said.
They noted that if shareholders ratify the compensation package, it’s possible that another plan will be put forth next year.
“Given Tesla’s history of exponentially larger awards, Musk may well ask for another award,” the group said.
Tesla CEO Elon Musk speaks at the 27th annual Milken Institute Global Conference at the Beverly Hilton in Los Angeles on May 6, 2024. (Photo by Frederic J. BROWN / AFP) (Photo by FREDERIC J. BROWN/AFP via Getty Images)
The group is also asking investors to vote against the reelection 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 restore Musk’s pay package, which was valued at $56 billion at the time, that was rejected by a Delaware judge this year. At the time, it also asked to shift the company’s corporate home to Texas.
The changes will be voted on by stockholders at a June 13 annual meeting.
Tesla posted record deliveries of more than 1.8 million electric vehicles worldwide in 2023, but the value of its shares has eroded quickly this year as EV sales soften.
The company said it delivered 386,810 vehicles from January through March, nearly 9% fewer than it sold in the same period last year. Future growth is in doubt and it may be a challenge to get shareholders to back a fat pay package in an environment where competition has increased worldwide.
Starting last year, Tesla has cut prices as much as $20,000 on some models. The price cuts caused used electric vehicle values to drop and clipped Tesla’s profit margins.
BEVERLY HILLS, CALIFORNIA – MAY 6: Elon Musk, co-founder of Tesla and SpaceX and owner of X Holdings Corp., speaks at the Milken Institute’s Global Conference at the Beverly Hilton Hotel,on May 6, 2024 in Beverly Hills, California. The 27th annual global conference explores various topics, from the rise of generative AI to electric vehicle trends and features participants, soccer star David Beckham and actor Ashton Kutcher. (Photo by Apu Gomes/Getty Images)
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