just say no

Tesla shareholders ask investors to vote against Musk's compensation package

The shareholder group said in a letter to shareholders that ratification of Musk's pay package would do nothing to promote Tesla's long-term growth and stability. Photo via cdn.britannica.com

A group of Texas-based Tesla's shareholders is asking investors to vote against a compensation package worth more than $40 billion for CEO Elon Musk, saying that it's not in the electric vehicle maker's best interest.

Tesla is struggling with falling global sales, slowing electric vehicle demand, an aging model lineup and a stock price that has tumbled 30 percent this year.

The shareholder group, which includes New York City Comptroller Brad Lander, SOC Investment Group and Amalgamated Bank, said in a letter to shareholders that ratification of Musk's pay package would do nothing to promote Tesla's long-term growth and stability.

There's also concern that approval of the pay package will potentially lead to lawsuits arguing that it is corporate waste. And Musk is viewed as a part-time CEO at Tesla, with his time increasingly being spent on other business commitments, the letter said.

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

They noted that if shareholders ratify the compensation package, it's possible that another plan will be put forth next year.

“Given Tesla’s history of exponentially larger awards, Musk may well ask for another award,” the group said.

The group is also asking 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.

Last month Tesla asked shareholders to restore Musk's pay package, which was valued at $56 billion at the time, that was rejected by a Delaware judge this year. At the time, it also asked to shift the company’s corporate home to Texas.

The changes will be voted on by stockholders at a June 13 annual meeting.

In a letter to shareholders released in a regulatory filing last month, Chairperson Robyn Denholm said that Musk has delivered on the growth it was looking for at the automaker, with Tesla meeting all of the stock value and operational targets in the 2018 package that was approved by shareholders. Shares at the time were up 571 percent since the pay package began.

“Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value,” Denholm wrote. “That strikes us — and the many stockholders from whom we already have heard — as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it.”

Tesla posted record deliveries of more than 1.8 million electric vehicles worldwide in 2023, but the value of its shares has eroded quickly this year as EV sales soften.

The company said it delivered 386,810 vehicles from January through March, nearly 9 percent fewer than it sold in the same period last year. Future growth is in doubt and it may be a challenge to get shareholders to back a fat pay package in an environment where competition has increased worldwide.

Starting last year, Tesla has cut prices as much as $20,000 on some models. The price cuts caused used electric vehicle values to drop and clipped Tesla’s profit margins.

In April, Tesla said that it was letting about 10 percent of its workers go, about 14,000 people.

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A View From HETI

SLB and Nevada-based Ormat Technologies are aiming to scale enhanced geothermal systems. Photo courtesy SLB

Houston-based energy technology company SLB and renewable energy company Ormat Technologies have teamed up to fast-track the development and commercialization of advanced geothermal technology.

Their initiative focuses on enhanced geothermal systems (EGS). These systems represent “the next generation of geothermal technology, meant to unlock geothermal energy in regions beyond where conventional geothermal resources exist,” the companies said in a news release.

After co-developing EGS technology, the companies will test it at an existing Ormat facility. Following the pilot project, SLB and Nevada-based Ormat will pursue large-scale EGS commercialization for utilities, data center operators and other customers. Ormat owns, operates, designs, makes and sells geothermal and recovered energy generation (REG) power plants.

“There is an urgent need to meet the growing demand for energy driven by AI and other factors. This requires accelerating the path to clean and reliable energy,” Gavin Rennick, president of new energy at SLB, said in a news release.

Traditional geothermal systems rely on natural hot water or steam reservoirs underground, limiting the use of geothermal technology. EGS projects are designed to create thermal reservoirs in naturally hot rock through which water can circulate, transferring the energy back to the surface for power generation and enabling broader availability of geothermal energy.

The U.S. Department of Energy estimates next-generation geothermal, such as EGS, could provide 90 gigawatts of electricity by 2050.

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