Tesla investors are urged to vote to remove Elon Musk, founder and CEO of the electric vehicle company, from the company’s board as anger grows over his bonus deal that could pay him a record $ 55.8bn ( £ 40bn).
Pirc, an influential advisor to shareholders, including the pension funds of UK local authorities, recommended on Tuesday that investors voted against the Tesla executive payment agreement because it “unfairly enriches the CEO.”
Pirc said the deal had exposed the company to a lawsuit, claiming that: “The board, including CEO Elon Musk, was awarded overcompensation packages over a three-year period that allegedly allowed the directors’ to enrich themselves at the expense of the company'”.
The shareholder adviser asked investors to vote against Musk’s re-election to the board because of the salary deal, and warned that it poses “a serious risk of damage to the reputation of the company and its shareholders.”
Pirc said Musk’s frequent controversial outbursts on Twitter had cost Tesla millions of dollars in deals and also represented “unnecessary reputational risk to the company.”
Last year, Musk was sued for $ 190 million in defamation damages for derogatory tweets about British spelunker Vernon Unsworth, who was helping to rescue 13 people trapped in a Thai cave. A jury found that the tweets did not meet the legal standard for defamation, and Musk was not held liable for damages.
In 2018, the regulator of the United States Stock Exchange (SEC) fined Musk and Tesla $ 20 million for tweets from the CEO who planned to take out the private company with a substantial premium to the share price, which which caused an increase in the share price. As part of the SEC deal, Musk was forced to resign his position as Tesla president.
The SEC ruled: “Indeed, Musk knew that the potential transaction was uncertain and subject to numerous contingencies. Musk had not discussed the specific terms of the deal, including the price, with potential financial partners, and his statements about the possible transaction lacked an adequate basis, in fact. ”
Pirc said the episode “sparked allegations of abuse in the stock market, and the SEC alleged that Musk had lied to investors. Musk and Tesla settled these claims with the SEC, paying $ 40 million, causing financial damage.”
Pirc’s shareholder report also raised concerns about Musk’s tweets opposing Covid-19’s blocking measures. “Mr. Musk has openly opposed the Covid-19 quarantine and reportedly required the workers to return to work during the quarantine, without sufficient precautions / protections and despite protests by the workers,” Pirc said . “This concern is encouraged, as several Tesla employees have also been reported to have tested positive for Covid-19 since returning to work.”
Investors were also urged to vote against Robyn Denholm’s re-election as Tesla president. He succeeded Musk when he was forced to resign in November 2018. Pirc said he should resign due to his role in overseeing Musk’s salary award as an independent non-executive chairman and as a member of the compensation committee.
Tesla’s annual general meeting was held on July 7, but the company delayed the vote on Sunday until September.
