Tesla shareholders should vote to oust Tesla chief executive Elon Musk from his position and the board of the company for his controversial tweets and a bonus package that could see him get richer by $55.8 billion, Pirc, a shareholder advisory firm from the UK said, as quoted by The Guardian.
“The board, including CEO Elon Musk, awarded themselves excessive compensation packages over a three-year period that allegedly allowed directors to ‘enrich themselves at the company’s expense’,” the advisory firm said.
Tesla’s chief executive has a unique compensation plan. Rather than a salary, Musk has the right to acquire Tesla shares at prices much below market prices contingent on certain milestones. This compensation plan came to the fore recently, when the company’s stock soared following the surprising report of yet another quarterly profit. As a result of this, Musk could buy the first tranche of his Tesla shares and then sell them, making a profit of more than $750 million assuming prices at the end of April.
Theoretically, this compensation scheme could make him a lot richer, and now it appears some shareholders, or at least their advisors, are not on board with that. According to Pirc, Musk is also a reputational risk for the company because of his Twitter habit, which has led to real-life confrontations with regulators and courts on more than one occasion.
The peak of Musk’s Twitter troubles came last year. First, in April, SEC took Musk to court after he tweeted that Tesla will manufacture half a million cars this year. However, the tweet was quickly followed by another one, clarifying that he “Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.”
A year earlier, Musk took the market by storm again when he declared on Twitter that he planned to take Tesla private and that funding had been secured. The tweet followed an FT report that Saudi Arabia had acquired a stake of between 3 and almost 5 percent, worth US$2 billion, in Tesla. This started a flood of speculation and attracted the attention of regulators.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.