A group of Tesla, Inc. (TSLA) shareholders is urging investors to vote against CEO Elon Musk's $46 billion compensation package, citing it as detrimental to the company's best interests.
The group is also appealing to investors to reject the reelection of board members Kimbal Musk, Elon's brother, and James Murdoch, a former executive at media company Twenty-First Century Fox.
The SEC letter, sent by New York City Comptroller Brad Lander and investors such as Amalgamated Bank, AkademikerPension, Nordea Asset Management, SOC Investment Group, and United Church Funds, highlighted Musk's public disputes with regulators, Twitter acquisition, controversial remarks, and legal issues tarnishing Tesla's reputation.
The shareholder group emphasized that ratifying Musk's pay package would not advance Tesla's long-term growth and stability. In a letter, the group expressed concerns about Tesla's lagging performance compared to competitors and the broader market, attributing it to Musk's numerous projects and controversial decisions, including the acquisition of Twitter.
The letter also stated that approving the compensation package could lead to lawsuits alleging corporate waste, given Musk's perceived divided attention as a part-time CEO. The group argued that the excessive nature of the award lacks incentivization and might pave the way for future compensation requests from Musk.
Citing poor management oversight of worker conditions, safety violations, and discrimination lawsuits, the shareholder group criticized the board's lack of effective governance and its push to reinstate the 2018 Pay Package without modifications.
Initially valued at $56 billion, the pay package's stock options were recently appraised at $46 billion. Stockholders are scheduled to vote on the proposed changes at the annual meeting on June 13.
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