A group of Tesla shareholders is urging investors to vote against CEO Elon Musk’s compensation package worth more than $40 billion, arguing that it is not in the company’s best interests.
Tesla is grappling with declining global sales, sluggish electric car demand, an older model lineup, 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, stated in a letter to shareholders that ratifying Musk’s pay deal will not positively impact Tesla’s long-term growth and stability.
Group Of Tesla Shareholders Ask Investors To Vote Against Musk’s Compensation Package
There is also concern that ratifying the remuneration package may result in litigation alleging corporate waste. According to the letter, Musk is perceived as a part-time CEO at Tesla, with his time increasingly being spent on other business commitments.
“Shareholders should not believe that this reward has any incentive effect—it does not. “What it does have is an excessiveness problem, which has been obvious since the beginning,” the organization stated.
They highlighted that if shareholders approve the remuneration package, another plan may be proposed next year.
“Given Tesla’s history of exponentially larger awards, Musk may well ask for another award,” the organization stated.
The group also requests that investors vote against the reelection of board members Kimbal Musk, Elon Musk’s brother, and James Murdoch, a former executive at media conglomerate Twenty-First Century Fox
Tesla urged shareholders this month to reinstate Musk’s $56 billion pay plan, which a Delaware judge had earlier this year rejected. At the time, it also requested that the company’s headquarters be moved to Texas.
Group Of Tesla Shareholders Ask Investors To Vote Against Musk’s Compensation Package
Stockholders will vote on the measures at the June 13 annual meeting.
In a statement to shareholders published in a regulatory filing last month, Chairperson Robyn Denholm stated that Musk has delivered on the automaker’s growth expectations. Tesla meets all of the stock value and operational benchmarks outlined in the 2018 shareholder package. Shares have been up 571% since the pay package began
“Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value,” Denholm stated in a letter. “That strikes us — and the many stockholders from whom we already have heard — as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it.”
Tesla reported record deliveries of more than 1.8 million electric vehicles worldwide in 2023, but the value of its stock has fallen sharply this year as EV sales have slowed.
The business said it shipped 386,810 automobiles from January to March, about 9% fewer than last year. Future growth is still being determined, and convincing shareholders to support a large pay package in a growing global competition may be difficult.
Tesla | Tesmian ImageGroup Of Tesla Shareholders Ask Investors To Vote Against Musk’s Compensation Package
Last year, Tesla reduced the costs of some models by up to $20,000. The price decreases caused the prices of used electric vehicles to fall, reducing Tesla’s profit margins.
In April, Tesla said it laid off around 10% of its workforce, or 14,000 individuals
SOURCE – (AP)
