Some shareholders criticized Elon Musk’s salary package

Some shareholders criticized Elon Musk’s salary package

Investors will vote next month on whether to re-approve the CEO’s compensation

A group of Tesla shareholders is asking investors to vote down Elon Musk’s $46 billion pay package, which is driving tension between the automaker’s super fans and skeptics.

The group — which includes New York City Comptroller Brad Lander on behalf two pension funds operated by the city and three municipal retirement systems — asked other shareholders to reject Musk’s pay package and the re-election of two members to Tesla’s board of directors, according to a regulatory filing.

Tesla shareholders will decide on June 13 whether to approve Musk’s pay package, which a judge struck down in January and was valued — at the time — at $56 billion, making it the largest executive compensation package in history. The pay package, which was approved by investors in 2018, has been put up for re-approval next month, and Tesla has asked shareholders to support it.

Tesla argues that the plan was valid, saying that 73% of shareholders approved the 2018 pay package, according to a proxy statement filed Wednesday. Musk — whose net worth is $194.9 billion, according to Forbes — has not been paid for “any of his work for Tesla” since 2018, according to the Austin, Texas-based company. He has served as CEO since 2008.

Tesla, which usually avoids heavy spending on advertisements and recently laid off its marketing team, has been buying promoted posts on X, formerly Twitter, to encourage voting in favor of the pay package. Musk has also been active on X, which he purchased in 2022, advocating for investors to get involved.

But some shareholders are concerned about Musk’s history of making promises that seem — and often are — too good to be true and a lack of oversight from the board. Many members of the board have a mixture of close personal, familial, or transactional ties to the CEO.

Delaware Court of Chancery Judge Kathaleen McCormick found earlier this year that defendants in a shareholder lawsuit, which included Musk and Tesla’s board, failed to meet the burden in proving that “the compensation plan was fair.” McCormick added that the “process leading to the approval of Musk’s compensation plan was deeply flawed” and noted that he “operates as if free of Board oversight.”

The shareholder group called for investors to vote against the re-election of Musk’s close friend, James Murdoch, and his brother, Kimbal Musk. Both are up for re-election to the board in June.

The group has an ally in Tesla’s largest retail investor — Leo Koguan, who controls more than 27 million shares — who told Elecktrek he will vote against the pay package and re-election of two board directors.

Investors are also worried about Musk’s attention span and priorities. In total, Musk leads seven companies, including aerospace giant SpaceX, social media company X, artificial intelligence startup xAI, and neurotechnology company Neuralink.

“Even as Tesla’s performance is floundering, the board has yet to ensure that Tesla has a full-time CEO who is adequately focused on the long-term sustainable success of our company,” the shareholder group wrote Monday.

In addition to the New York groups represented by Lander, the shareholder group includes SOC Investment Group, Amalgamated Bank, United Church Funds, Nordea Asset Management and AkademikerPension.

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