NYC Pensions Oppose Tesla Executive Pay Package

New York City Comptroller Brad Lander and seven other investment firms oppose Elon Musk’s proposed $56 billion pay package 

NYC Comptroller Brad Lander has
issued a letter calling for Tesla shareholders to reject a proposed pay package for Tesla CEO Elon Musk and the renomination of Kimbal Musk, Elon’s brother, and James Murdoch to the board of directors.  

The letter accuses Tesla’s board of having little independence from Musk and accused the board of poor oversight and governance over the company. “Problems remain unchecked and further indications that investors must act to protect shareholder value have emerged. Even as Tesla’s performance is floundering, the Board has yet to ensure that Tesla has a full-time CEO who is adequately focused on the long-term sustainable success of our Company,” the letter states. 

Lander also accused the board of allowing Musk to be overcommitted and not demanding he devote his time to his role as CEO. The auto chief also runs X, formerly Twitter, SpaceX, xAI, Neuralink, and The Boring Company.  

Musk previously threatened to build AI and robotics projects outside of Tesla if he did not have “~25% voting control” of the company. The letter criticized Musk’s decision to pull engineers from Tesla to work on projects at his other companies. 

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 The lack of Board oversight has effectively enabled Musk to use Tesla as a coffer for himself and his other business endeavors, even if these actions come at Tesla’s expense. In 2022, Musk admitted to using Tesla engineers to work on issues at Twitter (now known as X), and defended the decision by saying that no Tesla Board member had stopped him from using Tesla staff for his other businesses. More recently, Musk has begun poaching top engineers from Tesla’s AI and autonomy team for his new company, xAI,” the letter said.  

Tesla shareholders will vote on several decisions at the company’s annual meeting on June 13, including reincorporating the company in Texas and a proposed $56 billion pay package for CEO Elon Musk, as well as the appointment of several board members. The pay package, originally proposed in 2018, was overwhelmingly approved by 73% of shareholders but was voided by a judge in the Delaware Chancery Court earlier this year.  

Musk’s pay package was dependent on the company hitting certain milestones, such as increasing the market cap of the company by $650 billion over 10 years starting in 2018. Tesla stock increased nearly 2000% between 2018 and its peak in late 2021 but has declined just over 50% since then. Tesla had a market cap of $57.44 billion in 2018, and currently stands at $558.41 billion. Tesla’s market cap peaked at $1.24 trillion in November 2021.  

The pension funds represented by the comptroller’s office in the letter include the New York City Employees’ Retirement System, the New York City Teachers’ Retirement System, the New York City Police Pension Fund, the New York City Fire Pension Fund, and the New York City Board of Education Retirement System. These funds hold 3.7 million shares of Tesla worth $649 million, as of the first quarter of 2024.  

The letter was also signed by Amalgamated Bank, AkademikerPension, Nordea Asset Management, SHARE, SOC Investment Group, UNISON and United Church Funds. Combined, together the investors have more than $620 billion in assets. 

Tesla is currently the worst-performing stock in the magnificent seven and one of the worst-performing stocks in the S&P 500 so far this year. Tesla is down roughly 30% year to date after reporting weaker-than-expected sales amidst cooling electric vehicle demand and increased competition from China. Tesla aims to unveil its Robotaxi in August and is reportedly working towards an affordable, mass-market car, which is expected to be released sometime next year.  

Related Stories: 

PensionDanmark Sells Tesla, Puts It on ‘Exclusion List’ Over Union Dispute 

Tesla Seems to be Doing Fine With Musk Otherwise Engaged 

Tesla Recruits Former CIO of $1.5 Trillion Japanese Pension Fund GPIF 

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