US Unions Urge States to Oppose Tesla's $29 Billion Pay Package to Musk

According to Reuters, a coalition of U.S. labor unions and progressive advocacy groups is urging state treasurers responsible for overseeing public pension funds to oppose granting new compensation to Tesla CEO Elon Musk, warning that such excessive spending poses a risk to workers' retirement savings.

Musk; Image source: X

In an exclusive letter shared with Reuters, several unions and liberal advocacy groups, including the American Federation of Teachers and MoveOn, urged state officials in the United States to pressure asset management firms to oppose Musk's new compensation plan and to push Tesla to strengthen the independence of its board.

The aforementioned groups urged officials to oppose any new compensation plan for Musk and to vote against Tesla's board members who need to strengthen their independence. Some advocates stated in emails, "Tesla shareholders should not bear equity dilution just to grant the world's richest man more Tesla stock."

Tesla has not yet released a proxy statement outlining the voting items for the upcoming annual shareholders' meeting, but the aforementioned groups expect that the compensation issue will be included.

It is reported that multiple states in the United States manage pension funds for teachers and other employees, who are among the largest groups of investors in the country.

Tesla and Musk have not yet responded to requests for comment regarding the above report.

This call comes amid ongoing legal disputes surrounding Musk's record-breaking compensation package. In January last year, Kathaleen McCormick, a judge at the Delaware Court of Chancery in the United States, declared Musk's approximately $56 billion compensation package from 2018 invalid, stating that the package was an unfathomable compensation granted by a conflicted board of directors.

Although Elon Musk's 2018 compensation plan is still in the appeals process and has not yet reached a final verdict, Tesla has granted Musk 96 million new shares this month (valued at approximately $29 billion) as a "good faith transition compensation."

Tesla’s board of directors told shareholders that retaining Elon Musk is crucial, as his leadership is key to the company’s transformation from an electric vehicle manufacturer to a business focused on robotics and artificial intelligence.

Last June, Tesla shareholders voted to approveElon Musk's $56 billion compensation planThe company agreed to move its registered office to Texas, USA, but the related litigation has not yet been resolved—Kathaleen McCormick has since allowed the initiation of the appeal process, which may last for several months.