Benzinga - by Benzinga Neuro, Benzinga Staff Writer.
A coalition of Tesla Inc. (NASDAQ:TSLA) shareholders is urging investors to reject CEO Elon Musk‘s $56 billion pay package ahead of the EV giant’s annual meeting next month.
What Happened: According to Bloomberg, a group of Tesla shareholders, including Amalgamated Bank and SOC Investment Group, is pushing for a vote against Musk’s pay package. They argue that Musk is too distracted by his other ventures and not prioritizing Tesla’s interests.
The group also recommends voting against the reelection of directors Kimbal Musk and James Murdoch. They claim Tesla is experiencing a significant governance issue that needs immediate attention.
Musk’s compensation plan, approved in 2018, awarded him equity as Tesla’s market cap grew and operational targets were met. However, a Delaware judge voided the agreement in January, citing shareholder interest concerns.
"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 in a letter on Monday.
Why It Matters: Shareholder discontent is not new. In April 2023, a group of investors, including Amalgamated Bank, penned an open letter to Tesla‘s board criticizing Musk’s divided attention due to his involvement in other ventures like Twitter, SpaceX, and The Boring Company. They argued that Musk’s overcommitment was detrimental to Tesla amid growing competition and regulatory scrutiny.
In May, Tesla launched a dedicated “Vote Tesla” website to engage retail investors, who hold approximately 42% of the company’s shares. The board also enlisted a strategic advisor and an external law firm to spearhead the campaign to reapprove Musk’s pay package.
A legal expert believes Tesla is seeking shareholder approval for the old pay package rather than creating a new one as Musk cannot replicate the stock-pumping feats from 2018.
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