Tesla Investor Group Slams Elon Musk's $56-Billion Pay Agreement

The coalition also criticised Elon Musk's acquisition of Twitter, now known as X, attributing Tesla's underperformance partly to this decision

A coalition of Tesla Inc. shareholders is rallying fellow investors to vote against a $56 billion pay package for CEO Elon Musk at the company’s upcoming annual meeting on June 13. This move could significantly impact one of the world's largest fortunes. The coalition, including Amalgamated Bank, SOC Investment Group, and six other signatories holding a minor portion of Tesla stock, argues that Musk’s commitments to his other ventures detract from his ability to effectively lead the electric vehicle manufacturer. They have also called for shareholders to oppose the re-election of directors Kimbal Musk, Elon Musk’s brother, and James Murdoch.

"Tesla is suffering from a material governance failure which requires our urgent attention and action," the coalition stated in a letter on Monday.

Originally approved by shareholders in 2018, Musk's compensation package granted him equity awards as Tesla's market capitalisation and operational targets were met. Despite fulfilling all conditions, a Delaware judge voided the agreement in January, citing concerns it wasn't in shareholders' best interests.

In response, Tesla's board is resubmitting the pay package for a vote to reaffirm investor support. The board has actively encouraged shareholders to ratify the package, employing a strategic adviser to boost retail investor participation.

Over a year ago, many of the signatories addressed an open letter to Tesla’s board, highlighting their concerns about Musk's numerous commitments and requesting a meeting with board chair Robyn Denholm, who did not respond. The coalition also criticised Musk's acquisition of Twitter, now known as X, attributing Tesla's underperformance partly to this decision. Monday’s letter further highlighted Tesla's lagging sales and disappointing first-quarter results.

"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 letter concluded.