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

Houston could have ranked higher on a global report of top cities in the world if it had a bit more business diversification. Photo via Getty Images

A new analysis positions the Energy Capital of the World as an economic dynamo, albeit a flawed one.

The recently released Oxford Economics Global Cities Index, which assesses the strengths and weaknesses of the world’s 1,000 largest cities, puts Houston at No. 25.

Houston ranks well for economics (No. 15) and human capital (No. 18), but ranks poorly for governance (No. 184), environment (No. 271), and quality of life (No. 298).

New York City appears at No. 1 on the index, followed by London; San Jose, California; Tokyo; and Paris. Dallas lands at No. 18 and Austin at No. 39.

In its Global Cities Index report, Oxford Economics says Houston’s status as “an international and vertically integrated hub for the oil and gas sector makes it an economic powerhouse. Most aspects of the industry — downstream, midstream, and upstream — are managed from here, including the major fuel refining and petrochemicals sectors.”

“And although the city has notable aerospace and logistics sectors and has diversified into other areas such as biomedical research and tech, its fortunes remain very much tied to oil and gas,” the report adds. “As such, its economic stability and growth lag other leading cities in the index.”

The report points out that Houston ranks highly in the human capital category thanks to the large number of corporate headquarters in the region. The Houston area is home to the headquarters of 26 Fortune 500 companies, including ExxonMobil, Hewlett Packard Enterprise, and Sysco.

Another contributor to Houston’s human capital ranking, the report says, is the presence of Rice University, the University of Houston and the Texas Medical Center.

“Despite this,” says the report, “it lacks the number of world-leading universities that other cities have, and only performs moderately in terms of the educational attainment of its residents.”

Slower-than-expected population growth and an aging population weaken Houston’s human capital score, the report says.

Meanwhile, Houston’s score for quality is life is hurt by a high level of income inequality, along with a low life expectancy compared with nearly half the 1,000 cities on the list, says the report.

Also in the quality-of-life bucket, the report underscores the region’s variety of arts, cultural, and recreational activities. But that’s offset by urban sprawl, traffic congestion, an underdeveloped public transportation system, decreased air quality, and high carbon emissions.

Furthermore, the report downgrades Houston’s environmental stature due to the risks of hurricanes and flooding.

“Undoubtedly, Houston is a leading business [center] that plays a key role in supporting the U.S. economy,” says the report, “but given its shortcomings in other categories, it will need to follow the path of some of its more well-rounded peers in order to move up in the rankings.”

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This article originally ran on InnovationMap.

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