Daily Reports
Tesla Shareholders Divided over Elon Musk's $56 Billion Pay Package
The upcoming Tesla shareholder meeting on June 13 has sparked significant controversy over CEO Elon Musk’s hefty $56 billion compensation package. Major shareholders, including the Norwegian sovereign fund, Norges Bank Investment Management (NBIM), have begun to position themselves against the remuneration scale. NBIM, a prominent shareholder with a 0.98% stake in Tesla worth approximately $7.7 billion, stated its intention to vote against Musk’s pay deal, echoing its previous stance from 2018. Other shareholders, such as the US fund Calvert and proxy advisory firm Glass Lewis, have also criticized the scale of the compensation.
A rejection of Musk's compensation could potentially embarrass the CEO and may even prompt him to consider stepping down from his role at the company. Tesla President Robyn Denholm, in her communication to shareholders, defended the pay package. She noted that the compensation, primarily stock-based and spread over a decade, is designed to maintain Musk’s focus on achieving remarkable growth for Tesla.
Musk’s compensation package, originally framed in 2018, faced a judicial setback earlier this year when Delaware court judges invalidated it, citing inadequate disclosure of essential details to investors. The controversy has emerged at a pivotal moment for Tesla, as it undertakes initiatives aimed at shaping its future, including the development of a low-cost vehicle and advancements in autonomous driving technology.
Adding to the complexities, Tesla's proposal to move its headquarters from Delaware to Texas is under consideration. Shareholders, including NBIM and the US fund Calvert, have shown support for this move, which they believe will provide a better platform for innovation given Texas’s legislative and judicial environment.
Further complicating the shareholder dynamics is a separate proposal supporting Tesla to adopt a policy on freedom of association and collective bargaining. This comes amidst ongoing labor disputes, such as the strike by Tesla mechanics in Sweden since October 27, which underscores the tensions Tesla is facing with labor unions in the Nordic region.
- Notably, Tesla has defended the criticized pay package by emphasizing that the opposition omits critical considerations and is driven by speculation. It stands by the position that the package is essential for retaining Musk’s leadership and ensuring Tesla's sustained growth.
- The outcome of the shareholder vote on June 13 remains uncertain, with significant implications for the future course of Tesla. Whether the shareholders will align with the critical view of Musk’s compensation or support the company’s defense will shape the corporate governance dynamics of the automotive giant.
