New York Comptroller Rips Up Elon Musk’s $47 Billion Pay Plan

New York City Comptroller Brad Lander, who oversees five public pension funds with $242 billion in assets, has a message for Tesla’s board of directors and Tesla CEO Elon Musk: The maker of electric vehicles is publicly traded, so it should stop behaving like a family business with Musk at the head of the table.

“I don’t know what genuinely independent board would have a CEO who is also CEO of two other big companies,” Lander said. Fortune. “All other major listed companies with a genuinely independent board (and many of them not so independent) expect their CEO to be a full-time CEO of their company.”

Lander and a coalition of seven other investors are urging Tesla shareholders to reject Musk’s $47 billion stock option package at the company’s June 13 shareholder meeting. (His payout plan was originally valued at $55.8 billion, but has fluctuated with the company’s stock price performance.) Investors filed a notice this week detailing a host of concerns about the company’s governance and what Lander called Musk’s “stratospheric” compensation. .

One of them is that Musk does not work at Tesla full time, Lander said, adding that there is no doubt that Musk is distracted by his other companies, which include SpaceX, The Boring Company, xAI, X and Neuralink. He also expressed disbelief that Tesla’s board, after receiving a rebuke about its independence from a Delaware Chancery Court judge, would again ask investors to approve a compensation plan that would pay Musk. thousands of millions. Delaware Judge Kathaleen McCormick in January terminated Musk’s pay and ruled that the board, which includes Musk’s brother Kimbal and others with close personal and financial ties to Elon Musk, lacked the independence to approve the compensation plan and that Musk controlled the process and dictated the terms.

“It takes a lot for the Court of Chancery to say that,” Lander said. “For the board to then turn around and say, ‘We’re ignoring the court and moving forward with this stratospheric pay package and we’re not going to do anything about these distractions’” is out of the ordinary.

“I have never seen a board wantonly ignore a court like this,” he added.

Tesla did not immediately respond to the Fortune request for comment. Tesla Chairman Robyn Denholm rejected the court’s ruling, saying it was “nonsense” for her to be too close to Musk to be considered independent.

In Lander’s view, what Tesla does could have implications that spill over to other companies and founders who would prefer to maintain close control of their companies while still having access to the capital markets. “This is not shareholder governance as conceived by shareholder capitalism,” she said.

Americans have been fortunate to have thriving capital markets for generations due to the independent governance model in which shareholders can invest and believe that board members will act as their independent representatives in relation to companies’ management teams. , said.

But he warned that’s not happening at Tesla: “Rarely has there been such an egregious display of independent shareholder governance as this one.”

And while Lander and the other investors are not pushing to replace Musk, the Tesla CEO is “absolutely” replaceable, Lander said. Still, he would prefer that the board negotiate an “appropriate compensation package” with Musk and that Musk provide the level of attention and focus on Tesla that the job requires.

“He’s certainly qualified to be the CEO of Tesla, but CEO succession at publicly traded companies of this scale happens all the time,” Lander said. “There are other CEOs who could do it if this one doesn’t give him full-time attention and adopts a lucrative but at least vaguely reasonable compensation package.”

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