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

Syzygy Plasmonics has partnered with Volycys on its NovaSAF 1 project, which will convert biogas into sustainable aviation fuel in Uruguay. Photo courtesy of Syzygy

Houston-based Syzygy Plasmonics has announced a partnership with Velocys, another Houston company, on its first-of-its-kind sustainable aviation fuel (SAF) production project in Uruguay.

Velocys was selected to provide Fischer-Tropsch technology for the project. Fischer-Tropsch technology converts synthesis gas into liquid hydrocarbons, which is key for producing synthetic fuels like SAF.

Syzygy estimates that the project, known as NovaSAF 1, will produce over 350,000 gallons of SAF annually. It is backed by Uruguay’s largest dairy and agri-energy operations, Estancias del Lago, with permitting and equipment sourcing ongoing. Syzygy hopes to start operations by 2027.

"This project proves that profitable SAF production doesn't have to wait on future infrastructure," Trevor Best, CEO of Syzygy Plasmonics, said in a news release. "With Velocys, we're bringing in a complete, modular solution that drives down overall production costs and is ready to scale. Uruguay is only the start."

The NovaSAF 1 facility will convert dairy waste and biogas into drop-in jet fuel using renewable electricity and waste gas via its light-driven GHG e-Reforming technology. The facility is expected to produce SAF with at least an 80 percent reduction in carbon intensity compared to Jet A fuel.

Syzygy will use Velocys’ microFTL technology to convert syngas into high-yield jet fuel. Velocys’ microFTL will help maximize fuel output, which will assist in driving down the cost required to produce synthetic fuel.

"We're proud to bring our FT technology into a project that's changing the game," Matthew Viergutz, CEO of Velocys, added in the release. "This is what innovation looks like—fast, flexible, and focused on making SAF production affordable."

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