A group of Tesla shareholders is calling on fellow investors to vote against CEO Elon Musk’s $56 billion pay package, citing concerns over his distracting commitments to other companies and the automaker’s underperformance.
Bloomberg reports that in a letter addressed to shareholders on Monday, a coalition led by Amalgamated Bank and SOC Investment Group, along with six other signatories, argued that Musk’s involvement in five other companies he controls is detrimental to Tesla’s best interests. The group also urged shareholders to vote against the reelection of directors Kimbal Musk, Elon Musk’s brother, and James Murdoch.
Elon Musk, chairman and chief executive officer of Tesla Motors, center, participates in the opening bell ceremony at the Nasdaq Marketsite with his twin boys Griffin, green shirt at center, and Xavier, right in blue shirt, and his fiancee Talulah Riley, second from right, in New York, U.S., on Tuesday, June 29, 2010. Tesla Motors Inc., the electric car company that hasn’t posted a profit, raised $226 million selling shares above its forecast price range in the first initial public offering of a U.S. automaker in a half century. Photographer: Daniel Acker/Bloomberg via Getty Images
The shareholders’ letter stated, “Tesla is suffering from a material governance failure which requires our urgent attention and action.” This plea comes as Tesla’s board is asking investors to approve Musk’s pay package for a second time, following a Delaware judge’s decision to void the deal in January due to shareholders being inadequately informed of key details.
Musk’s pay package, initially approved by shareholders in 2018, granted him equity awards as Tesla achieved certain market capitalization and operational targets. Despite the company meeting all the conditions for Musk to receive the full payout of stock options, the judge’s ruling has necessitated a revote. In response, Tesla’s board has hired a strategic adviser to increase retail investor participation ahead of the annual meeting scheduled for June 13.
The shareholder group expressed concerns about Musk’s numerous commitments, noting that many of the signatories had published a separate open letter to Tesla’s board more than a year ago, seeking a meeting with board chair Robyn Denholm, which went unanswered. They argue that Musk’s decision to buy X/Twitter has “played a material role in Tesla’s underperformance,” undermining one of the board’s primary justifications for the substantial pay award – to keep Musk focused on the company’s long-term success.
The shareholders wrote, “If this was one of the primary reasons for the 2018 pay package, then it has been an abysmal failure, as six years later Musk’s outside business commitments have only increased.” They also pointed out that Musk founded another startup last year, xAI, which has hired away artificial intelligence specialists from Tesla.
Read more at Bloomberg here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
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