Elon Musk’s Tesla pay package assailed by shareholder group

Elon Musk’s Tesla pay package assailed by shareholder group

By Claudia Assis

Pay package is excessive, and board’s failure to rein in Musk is detrimental to Tesla, group says

New York City’s investment chief and other key investors are urging Tesla Inc. shareholders to vote against Chief Executive Elon Musk’s $56 billion pay package and the reelection of board directors Kimbal Musk and James Murdoch.

Musk’s pay, voided in a Delaware court in January, does not serve Tesla (TSLA) shareholders, the group said in an open letter Monday.

“Shareholders should not pretend that this award has any kind of incentivizing effect – it does not,” the letter said. “What it does have is an excessiveness problem, which has been glaringly apparent from the start.”

Tesla shareholders will vote on the CEO package as well as the company’s re-incorporation in Texas and the two board members’ reelection.

The meeting is scheduled for June 13, with the company taking the unusual step of launching a website to urge shareholders to vote for its proposals. On Monday, Tesla also released a video urging passage of its proposals.

Signees of Monday’s letter include Amalgamated Bank, Danish pension fund AkademikerPension, Nordea Asset Management, and United Church Funds, an investment firm mostly serving United Church of Christ churches and ministries, as well as New York City Comptroller Brad Lander.

The letter also slammed Tesla’s board, saying that its “failure to curtail” Musk jeopardizes the Tesla brand.

“Over the past few years, Elon Musk has dominated the headlines with his public fights with regulators, acquisition of Twitter, controversial statements on X, and his legal and personal troubles,” the letter said.

There are “indications that the steady stream of negative Musk-related press coverage has led to a decline in the company’s reputation among consumers, which in turn is having a negative effect on Tesla’s bottom line.”

Tesla “is suffering from a material governance failure which requires our urgent attention and action,” and it is “critical” to reject Kimbal Musk, who is Elon Musk’s brother, and James Murdoch reelections, it said.

Tesla shares have rallied 23% over the past month, but are still down about 30% year to date, compared to the S&P 500’s SPX 11% gain this year.

-Claudia Assis

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05-20-24 1814ET

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