A group of Tesla shareholders are urging investors to vote against a compensation package exceeding $40 billion for CEO Elon Musk, citing concerns about its impact on the electric vehicle maker's future. The shareholders, including New York City Comptroller Brad Lander, SOC Investment Group, and Amalgamated Bank, argue that ratifying Musk's pay package would not contribute to Tesla's long-term growth and stability.
Tesla is currently facing challenges such as declining global sales, slowing demand for electric vehicles, an aging model lineup, and a 30% drop in its stock price this year. The shareholder group expressed worries that approving the compensation package could potentially lead to lawsuits claiming corporate waste. They also highlighted Musk's increasing focus on other business commitments, raising questions about his role as a part-time CEO at Tesla.
The group emphasized that the proposed award does not provide meaningful incentives and criticized its excessive nature. They cautioned that if shareholders approve this package, Musk might seek even larger awards in the future. Additionally, the shareholders are urging investors to vote against the reelection of board members Kimbal Musk and James Murdoch.
Last month, Tesla sought shareholder approval to reinstate Musk's pay package, previously valued at $56 billion, which had been rejected by a Delaware judge earlier this year. The company also proposed relocating its corporate headquarters to Texas. These proposed changes will be put to a vote at the annual meeting scheduled for June 13.
Despite achieving record deliveries of over 1.8 million electric vehicles globally in 2023, Tesla's stock value has declined significantly this year due to softening EV sales. The company reported a 9% decrease in vehicle deliveries from January to March compared to the same period last year. Tesla has responded to market challenges by reducing prices by up to $20,000 on certain models, impacting used EV values and profit margins.
In April, Tesla announced a workforce reduction of approximately 10%, affecting around 14,000 employees. The company's future growth prospects remain uncertain, and securing shareholder support for a substantial pay package in a competitive market environment poses a significant challenge.
