- Tesla investors voted Thursday to approve Elon Musk’s multibillion-dollar pay package.
- However, some institutional shareholders told BI that Musk’s award was a mistake.
- One investor questioned whether Musk is the right person to continue leading Tesla.
Some institutional Tesla shareholders told Business Insider that approving Elon Musk’s record pay package was a mistake and that they have lingering concerns about Musk’s ability to lead the company.
Investors representing about 72% of the company’s shares voted Thursday to greenlight Musk’s $55 billion pay package, which was struck down by a Delaware court in January. The vote does not immediately restore Musk’s award, but it does give Tesla’s lawyers some ammunition when they re-file their case in Delaware.
Reuters reported that Vanguard, the largest institutional shareholder with a 7% stake in Tesla, voted to approve the pay package.
However, despite majority approval of Musk’s pay package, institutional shareholders who spoke to Business Insider were skeptical that the $55 billion stock option was commensurate with his performance and remained concerned about Musk’s leaders. the company, including Musk.
“Once again it has been confirmed that Tesla is a big company with not so good governance,” Anders Schelde, CIO of AkademikerPension, a Danish pension fund that invests in Tesla, told BI in an email. “We continue to invest, but governance is a red flag, and I seriously wonder if Tesla would be a better company with or without Mr. Musk, and I think many investors have the same doubts.”
AkademikerPension is one of eight institutional Tesla shareholders who co-signed a letter in May advising other investors to vote against both Musk’s pay package and the re-election of James Murdoch and Musk’s brother, Kimbal Musk, to positions on the company. Tesla board of directors. Investors voted to retain both men on the board.
It is unclear how many Tesla shares AkademikerPension owned as of June 14.
Shareholders ask for board oversight
During Thursday’s shareholder meeting, Musk questioned institutional shareholders’ concerns, although he did not name specific investors.
“Talking to a lot of the big institutional investors…they’re often in New York and don’t drive cars,” Musk said at the meeting. “Then I’ll ask them, ‘Have you tried autonomous driving? You know, version 12.3?’ And they say, ‘Uh, no.’ Well, you should try it. That would be a good thing.”
New York City Comptroller Brad Lander, who also signed the May letter, told BI in an email that approving the pay package was a “mistake” but that the company should move forward with clear plans for a constant growth and ensuring Musk focuses on that. goal.
“We expect genuine board oversight and a CEO deeply committed to Tesla’s growth rather than other companies,” Lander said in a statement. “The Board should ensure that its approval is required for any attempt to leverage Tesla’s resources for other Musk companies, aligning shareholder interests with the company’s goals.”
Lander added that the board should hire a “compensation consultancy” to renegotiate an incentive plan for Musk that is not dilutive to shareholders rather than defending the pay package in court.
Lander’s spokesperson told BI that as of April 30, the New York City Retirement System owned more than 3.4 million Tesla shares.
The California Public Employees Retirement System, or CalPERs, which the pension fund says owns about 9.2 million Tesla shares, has also expressed its opinion of eliminating Musk’s pay package.
A CalPERS spokesperson declined to comment, but pointed to a statement released a day before Thursday’s shareholder vote, which stated that Musk “has the right to be well compensated for his work,” but the current awards package is excessive and “highly dilutive for shareholders.” “
“This exorbitant compensation package is at odds with CalPERS’ long-held views on executive compensation,” CalPERS CEO Marcie Frost said in the statement. “The compensation is excessive compared to that of executives at similar companies, highly dilutive to shareholders and is not tied to Tesla’s long-term profitability.”
Musk and a Tesla spokesperson did not immediately respond to a request for comment.
