Tesla investors are urged to vote to remove Elon Musk, CEO of the electric vehicle company, from the company’s board of directors as anger increases over his bonus which could bring him a record high of $ 55.8 billion (£ 40 billion).
Pirc, an influential shareholder adviser, including UK pension funds from local authorities, on Tuesday recommended investors to vote against the Tesla executive salary agreement because it “unfairly enriches the CEO.”
Pirc said the deal exposed the company to a lawsuit, arguing that: “The board of directors, including CEO Elon Musk, has been awarded excessive compensation packages over a three-year period that would have allowed the directors to” get rich at the expense of the company “.”
The shareholder adviser called on investors to vote against Musk’s reelection to the board because of the salary negotiation and warned that it represented “a serious risk of damage to the reputation of the company and its shareholders.”
Pirc said that Musk’s frequent and controversial Twitter outbreaks cost Tesla millions of dollars in the settlements and also represented an “unnecessary reputational risk for the company.”
Last year Musk was sued for $ 190 million for defamation damage due to dismissive tweets about British splitter Vernon Unsworth, who was helping to rescue 13 people trapped in a Thai cave. A jury found that the tweets did not reach the legal standard for defamation and Musk was not held liable for damages.
In 2018, the U.S. regulator Securities and Exchange (SEC) fined both Musk and Tesla $ 20 million for tweets from the CEO who planned to bring the company at a considerable price compared to the share price, causing an increase in the price of the actions. As part of the agreement with the SEC Musk was forced to give up his position as president of Tesla.
The SEC said: “In truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies. Musk had not discussed specific terms of the agreement, including the price, with any potential financial partner, and his statements about the possible transaction did not actually have an adequate basis. “
Pirc said the incident “sparked stock exchange abuse allegations, with the SEC saying that Musk had lied to investors. Musk and Tesla resolved these complaints with the SEC, paying $ 40 million, causing financial damage. “
The Pirc shareholder report also raised concerns about Musk’s tweets in opposition to the blocking measures of Covid-19. “Mr. Musk was a vocal opponent of the Covid-19 quarantine, and reportedly asked workers to return to work during the quarantine, without sufficient precautions / protections and despite workers’ protests,” said Pirc. “This concern is further reinforced as more Tesla employees have also been reported to have tested positive for Covid-19 since returning to work.”
Investors were also asked to vote against Robyn Denholm’s re-election as president of Tesla. He succeeded Musk when he was forced to resign in November 2018. Pirc said he should have resigned because of his role as supervisor of Musk’s paid prize as an independent non-executive chairman and as a member of the remuneration committee.
Tesla’s annual general meeting was expected to take place on July 7, but the company delayed voting on Sunday until September.