Tesla shareholders clash over Musk’s compensation

Tesla shareholders clash over Musk’s compensation

Shareholders Clash

Tesla and its CEO, Elon Musk, are pushing back against groups opposing Musk’s $46 billion compensation package, as Tesla shareholders prepare to vote on whether to ratify the payout. The California Public Employees’ Retirement System (CalPERS), a major investor that owns 9.5 million Tesla shares, is the latest to signal a vote against Musk’s compensation. “We do not believe that the compensation is commensurate with the performance of the company,” CalPERS CEO Marie Frost said. In 2018, Tesla decided on a compensation package allowing Musk to purchase up to 304 million shares at $23.34 each, contingent on meeting a series of challenging milestones. Nearly 75% of shareholders approved the package. By the end of 2022, Musk had met enough goals to receive the full package. However, a Delaware judge responded to a shareholder lawsuit by calling the approval process “deeply flawed” and the sum “unfathomable,” deeming it unfair to investors.

Shareholders dispute Musk’s pay package

Other investors, including Leo Koguan, Tesla’s biggest retail investor who owns 27 million shares, have also asked shareholders to vote down the package. Proxy advisory firm Glass Lewis recommended against the compensation due to its “excessive size.”

In response, Tesla has purchased advertisements and launched campaigns promoting the board’s recommendations. Tesla board chair Robyn Denholm has been engaging with larger institutional investors, while Musk has been active on social media, criticizing opposing groups. Musk accused CalPERS of opposing the package for social reasons at the expense of its constituents and the state of California. Furthermore, Musk criticized Glass Lewis in a series of social media posts, accusing the firm of promoting unlawful discrimination. Tesla rebuked Glass Lewis’ recommendations, arguing that Musk has driven “extraordinary” growth for the company and has substantial personal investment in Tesla’s success. As the voting date approaches, the debate over Musk’s compensation package continues to intensify, highlighting the divide among Tesla’s shareholders and institutional investors.

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