Tesla investors are urging shareholders to vote against Elon Musk’s $56bn payday and have slammed the board for failing to curtail him.
The group of shareholders calling for investors to push back includes New York City comptroller Brad Lander. He wrote to fellow Tesla investors on Monday asking them to refuse Mr Musk’s pay package as well as the re-appointment of two board members, according to The Wall Street Journal.
“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 group wrote on Monday.
“Tesla is suffering from a material governance failure which requires our urgent attention and action,” they added.
In the letter, the investors argue against the re-appointment of Kimball Musk, Mr Musk’s brother, and James Murdoch, a personal friend, because of their close connection to Mr Musk. Kimball Musk has been on the board for two decades.
Mr Lander argued that the board has been too close to Mr Musk and that they hadn’t done their due diligence when assessing the pay package.
Also part of the shareholder group critical of Mr Musk’s compensation package are Amalgamated Bank, SOC Investment Group, Nordea Asset Management, United Church Funds, and Danish pension fund AkademikerPension. Mr Lander, a Democrat, is in charge of New York City’s public pension funds.
Shareholders are set to vote on Mr Musk’s compensation and other issues, such as moving the firm’s incorporation to Texas, at Tesla’s annual meeting on 13 June. The compensation package received the green light from shareholders in 2018 but it was struck down in January by a court in Delaware, pointing to issues with the approval process. The judge was also concerned that it wasn’t in the shareholders’ best interest, Bloomberg noted.
Tesla then proposed the compensation package yet again and has worked to convince shareholders to back it.
The company has argued that Mr Musk earned the money by reaching targets set in 2018 when it comes to Tesla’s share price and other matters.
But a number of investors feel that the compensation package has raised questions regarding the independence of the board as well as Mr Musk’s role atop Tesla amid rising competition and decreasing demand in the electric vehicle market.
The group of shareholders critical of the pay package argues that the board of Tesla is filled with allies of Mr Musk and that it hasn’t seriously held him accountable. Mr Musk is at the head of several companies that he splits his time between. The group also said Mr Musk’s use of Tesla stock to fund other projects puts investors at risk.
Mr Musk’s buying of Twitter “played a material role in Tesla’s underperformance”, the group argued.
