Major Pension Funds Urge Tesla Shareholders to Vote Against Musk’s $56 Billion Payday

A group of Tesla investors have come together to encourage other shareholders to vote against CEO Elon Musk’s historic compensation package.

$56 Billion Pay Package

Image Credit: Shutterstock / pickingpok

Tesla CEO Elon Musk has spent years trying to push a staggering $56 billion payout for himself – but now, several shareholder groups invested in the company are pushing back.

Upcoming Tesla Meeting

Image Credit: Shutterstock / Andrey_Popov

The EV giant’s next shareholder meeting will take place on June 13, and Tesla shareholders must vote on whether to approve a historic pay package, made up of $56 billion worth of shares, for the company’s co-founder and CEO. 

A Contradictory Letter

Image Credit: Shutterstock / Romankonovalov

But now a letter has been sent out to Tesla shareholders. Written by the New York City Comptroller Brad Lander and signed by several of NYC’s ​​largest employee pension funds and other investment groups, the letter urged investors to vote against the pay package.

A “Part-Time CEO”

Image Credit: Shutterstock / Frederic Legrand – COMEO

It argued that the payment would do little to serve investors or the company, referring to Musk as a “part-time CEO” who was no longer fully committed to Tesla affairs and development, let alone shareholder interests.

Going Back to 2018

Image Credit: Shutterstock / Zivica Kerkez

According to the letter, the original pay package which was first proposed in 2018, was established as an incentive to keep Musk focused on Tesla for the next decade. 

His Commitments Aren’t With Tesla

Image Credit: Shutterstock / BlueSkyImage

“If this [time commitment incentive] was one of the primary reasons for the 2018 pay package, then it has been an abysmal failure,” Lander wrote. “As six years later Musk’s outside business commitments have only increased.”

Heading Several Companies

Image Credit: Shutterstock / Sundry Photography

It is a reasonable accusation, as Musk is now the concurrent Chair and CTO of aerospace company SpaceX, and CEO of X and XAI, amongst other companies like NeuraLink.

No Incentivizing Effect

Image Credit: Shutterstock / SFIO CRACHO

“Shareholders should not pretend that this award has any kind of incentivizing effect — it does not,” Lander continued. “What it does have is an excessiveness problem, which has been glaringly apparent from the start.”

Largest Compensation Package in History

Image Credit: Shutterstock / Bizketz

Excessive certainly refers to the size of the package, which would make it the largest compensation package in corporate history. 

Put to Vote in 2018

Image Credit: Shutterstock / Mircea Moira

The package was first put to vote in 2018, and it passed. It might have been successful if a group of shareholders hadn’t taken their complaints to court.

Voiding the Package

Image Credit: Shutterstock / Beautrium

Their case went to trial in 2022 and was finally settled in January of this year when a Delaware judge voided the package over claims that Tesla had misled their shareholders and that the company board had a conflict of interest due to several close relationships between Musk and board members. 

“Material Governance Failure”

Image Credit: Shutterstock / Stock-Asso

The letter went even further, claiming that Tesla was ”suffering from a material governance failure which requires our urgent attention and action.”

Not Enough Insurance from the Board

Image Credit: Shutterstock / Pressmaster

“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,” Lander continued, referring to the drop in Tesla’s EV deliveries in the previous quarter. 

Board Re-Election

Image Credit: Shutterstock / MIA Studio

Musk’s pay package isn’t the only decision shareholders will be asked to vote on. They will also be asked to vote on the re-election of Kimball Musk, Musk’s brother, and James Murdoch, son of Australian media magnate Rupert Murdoch.

Too Close to Musk

Image Credit: Shutterstock / fizkes

The letter also urged shareholders to vote against these reappointments on the grounds that both men had too close of a relationship and were thus too biased toward Musk. 

Close Personal Ties

Image Credit: Shutterstock / Photo Smoothies

“Tesla’s Board is stacked with directors that have close personal ties to CEO Elon Musk, “ Lander elaborated. “There are multiple indications that these ties, coupled with excessive director compensation, prevent the level of critical and independent thinking required for effective governance.”

Other Investor Groups Involved

Image Credit: Shutterstock / Pressmaster

Aside from the New York pension funds signed to the newsletter, they were also joined by Amalgamated Bank, SOC Investment Group, Nordea Asset Management, United Church Funds, and Danish pension fund AkademikerPension, all of which have been critical of the compensation package.

Incorporating to Texas

Image Credit: Shutterstock / TZIDO SUN

The meeting will also include a vote to incorporate the firm into Texas, where the company headquarters is currently located. 

Convincing Shareholders

Image Credit: Shutterstock / aerogondo2

On the opposite side of the discussion, Tesla and Musk have pushed hard to convince shareholders to approve the package. 

Advertising Efforts 

Image Credit: Shutterstock / ESB Professional

Earlier this month Tesla – which has historically eschewed mass advertising – made the unusual move of paying for several ads and promoted posts encouraging shareholders to ratify Musk’s 2018 pay package.

Remote No More: 19 Companies Returning to the Office

Image Credit: Shutterstock / Monkey Business Images

As the pandemic wanes, companies are recalling remote workers back to the office, sparking debates on fairness, costs, and convenience. However, there are also notable productivity, coworking, and mental health benefits to consider. Feeling the effects of these changes? Remote No More: 19 Companies Returning to the Office

8 Costco Must Buys and 8 to Leave Behind

Image Credit: Pexels / Gustavo Fring

Ever wandered Costco’s aisles, questioning if that giant jar of pickles is a real bargain? Or debated buying tires where you get your rotisserie chicken? Welcome to the definitive guide to Costco shopping—a journey to save money, prevent regrets, and offer quirky insights into bulk buying. 8 Costco Must Buys and 8 to Leave Behind

23 Reasons Texas Is the Next Big Thing

Image Credit: Shutterstock / Sean Pavone

Texas is becoming a beacon of opportunity, blending cultural heritage with economic growth. From its landscapes to its industries, the Lone Star State offers a dynamic lifestyle. Here are 23 reasons why Texas stands out, attracting entrepreneurs, artists, tech professionals, and families seeking new beginnings. 23 Reasons Texas Is the Next Big Thing

15 Top Sites to Sell Your Unwanted Goods Besides Craigslist

Image Credit: Shutterstock / GaudiLab

Selling your unwanted items can declutter your space and boost your income. While Craigslist is popular, there are many alternatives with unique features and wider audiences. Explore these 15 Craigslist alternatives for selling everything from furniture to electronics, finding the perfect platform to turn clutter into cash. 15 Top Sites to Sell Your Unwanted Goods Besides Craigslist

Work from Anywhere: 19 Companies Still Supporting Remote Work

Image Credit: Shutterstock / insta_photos

Tired of commuting and craving work flexibility? You’re not alone. Many companies now offer remote work, benefiting both employees and employers. Ever wondered how this shift could enhance your work-life balance? Work from Anywhere: 19 Companies Still Supporting Remote Work

The postMajor Pension Funds Urge Tesla Shareholders to Vote Against Musk’s $56 Billion Payday first appeared on Liberty & Wealth.

Featured Image Credit: Shutterstock / Frederic Legrand – COMEO.

The content of this article is for informational purposes only and does not constitute or replace professional financial advice.

Leave a Comment