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 viacdn.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

Matthew Costello, CEO and co-founder of Voyager Portal, joins the Houston Innovators Podcast. Photo courtesy of Voyager

For several years now, Matthew Costello has been navigating the maritime shipping industry looking for problems to solve for customers with his company, Voyager Portal.

Initially, that meant designing a software platform to enhance communications and organization of the many massive and intricate global shipments happening every day. Founded in 2018 by Costello and COO Bret Smart, Voyager Portal became a integral tool for the industry that helps users manage the full lifecycle of their voyages — from planning to delivery.

"The software landscape has changed tremendously in the maritime space. Back in 2018, we were one of a small handful of technology startups in this space," Costello, who serves as CEO of Voyager, says on the Houston Innovators Podcast. "Now that's changed. ... There's really a huge wave of innovation happening in maritime right now."

And, predictably, some of those waves are caused by new momentum within the energy transition.

"The energy transition has thrown up a lot of questions for everyone in the maritime industry," Costello says. "The regulations create a lot of questions around cost primarily. ... And that has created a huge number of opportunities for technology."

Fuel as a primary cost for the maritime industry. These cargo ships are traversing the world 24/7 and burning fuel at all times. Costello says there's an increased focus on the fuel process — "all with a goal of essentially reducing carbon intensity usage."

One of the ways to move the needle on reducing the carbon footprint of these ships is optimizing the time spent in port, and specifically the delays associated. Demurrage are charges associated with delays in loading and unloading cargo within maritime shipping, and Costello estimates that the total paid globally in demurrage fees is around $10 billion to $20 billion a year.

"These fees can be huge," Costello says. "What technology has really enabled with this problem of demurrage is helping companies drill down to the true root cause of what something is happening."

All this progress is thanks to the enhancement — and wider range of acceptance — of data analysis and artificial intelligence.

Costello, who says Voyager has been improving its profitability every quarter for the last year, has grown the business to around 40 employees in its headquarters of Houston and three remote offices in Brazil, London, and Singapore. The company's last round of funding was a series A in 2021. Costello says the next round, if needed, would be next year.

In the meantime, Voyager is laser focused on providing optimized, cost-saving, and sustainable solutions for its customers — around half of which are headquartered or have a significant presence in Houston. For Costello, that's all about putting the control back into the hands of his customers.

"If we think back to the real problems the industry faces, a lot of them are controlled by different groups and parties. The fact that a ship cannot get in and out of a port quickly is not necessarily a function of one party's issue — it's a multitude of issues, and there's no one factor," Costello says on the show. "To really make the whole process efficient end-to-end you need to provide the customer to access and options for different means of getting cargo from A to B — and you need to have a sense of control in that process."

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This article originally ran on InnovationMap.

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