A group of Tesla (Nasdaq: TSLA) shareholders, including Amalgamated Bank (Nasdaq: AMAL) and SOC Investment Group, is calling on investors to vote against CEO Elon Musk’s proposed $56 billion compensation package at the company’s upcoming annual meeting on June 13.
The coalition argues that the pay package is not in the best interest of the electric vehicle maker, citing concerns over Musk’s divided attention among his multiple business ventures and Tesla’s recent performance challenges.
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In a letter to shareholders, the group highlighted Tesla’s declining global sales, slowing electric vehicle demand, aging model lineup, and a 30% drop in the stock price this year. They also expressed apprehension about potential lawsuits arguing that the pay package constitutes corporate waste. The shareholders questioned the incentivizing effect of the proposed compensation, given Musk’s perceived role as a part-time CEO at Tesla.
The group is also urging investors to vote against the reelection of board members Kimbal Musk, Elon’s brother, and James Murdoch, a former executive at media company Twenty-First Century Fox (Nasdaq: FOXA).
The shareholders claim that Tesla is suffering from a material governance failure that requires urgent attention and action.
Musk’s pay package, originally approved by shareholders in 2018, was recently voided by a Delaware judge over concerns that it was not in the best interest of shareholders. Tesla’s board is now putting the package to a second vote to demonstrate continued investor support. The company has hired a strategic adviser to drive retail investor participation in the upcoming vote.
The shareholder group raised additional concerns about Tesla’s lagging sales and disappointing first quarter, emphasizing the need for a full-time CEO who is adequately focused on the company’s long-term sustainable success.
“Over the past three years, and especially over the past year, Tesla has clearly lagged behind its competitors and the broader market. We believe that the distractions caused by Musk’s many projects, particularly his decision to buy Twitter, have played a material role in Tesla’s underperformance,” they wrote.
Information for this story was found via Bloomberg, AP News, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
