A group of Tesla shareholders are asking investors to vote against a compensation package worth more than $40 billion for CEO Elon Musk, saying it is not in the electric vehicle manufacturer’s interest.
Tesla is struggling with declining global sales, declining demand for electric vehicles, an aging model range and a share price that has fallen 30% this year.
The shareholder group, which includes New York City Comptroller Brad Lander, SOC Investment Group and Amalgamated Bank, said in a letter to shareholders that ratifying Musk’s pay package would do nothing to promote Tesla’s long-term growth and stability.
There are also concerns that the approval of the pay package may lead to lawsuits claiming it is a waste of business. And Musk is seen as a part-time CEO at Tesla, with his time increasingly spent on other business commitments, the letter said.
“Shareholders should not pretend that this reward has any incentive effect; that is not the case. What it does have is an excess problem, which has been glaringly obvious from the start,” the group said.
They noted that if shareholders ratify the compensation package, it is possible that another plan will be proposed next year.
“Given Tesla’s history of exponentially larger prices, Musk could ask for a new price,” the group said.
The group is also asking investors to vote against the re-election of board members Kimbal Musk, Elon’s brother, and James Murdoch, a former executive at media company Twenty-First Century Fox.
Last month, Tesla asked shareholders to reinstate Musk’s pay package, which was valued at $56 billion at the time and was rejected by a Delaware judge this year. At that time, a request was also made to move the company’s headquarters to Texas.
The changes will be voted on by shareholders at an annual meeting on June 13.
Tesla posted record deliveries of more than 1.8 million electric vehicles worldwide in 2023, but the value of its shares has rapidly eroded this year as electric vehicle sales slow.
The company said it delivered 386,810 vehicles from January through March, down nearly 9% from the same period last year. Future growth is in doubt and getting shareholders to support a fat compensation package in an environment where global competition has increased may be a challenge.
Starting last year, Tesla has lowered prices on some models by as much as $20,000. The price cuts reduced the value of used electric vehicles and limited Tesla’s profit margins.
In April, Tesla said it would let go about 10% of its employees, about 14,000 people.
