NYC Comptroller Brad Lander is leading the charge against Musk's compensation package, arguing for greater independence on Tesla's board of directors.

The ongoing drama at Tesla continues to unfold, with disappointing first-quarter sales, significant layoffs, a major safety recall of the Cybertruck, and concerns surrounding the company's move towards robotaxis. However, one major flashpoint that has garnered attention is Musk's enormous pay package.

The pay package, originally approved in 2018, was revoked by the Delaware Court of Chancery in January. The court deemed its approval "deeply flawed," highlighting concerns over the lack of independence among Tesla's board members. Now, Tesla's board is seeking investors' approval once again, including their support for Musk and several other proposals at the annual general meeting set for June 13.

Musk aims to increase his control over Tesla from the current 20.5% to 25%, citing the need to focus on autonomy, artificial intelligence, and robotaxis for transformative growth. However, dissenting shareholders argue for a more independent board and continued emphasis on electric vehicles (EVs).

A coalition opposing Musk's pay package includes NYC Comptroller Brad Lander, several NYC pension funds, and seven investment firms. Lander, who oversees the city's public pension funds and their investments in companies like Tesla, has written an official letter urging shareholders to vote against Musk's compensation package.

Lander emphasizes the importance of a fair pay package negotiated by an independent board. He criticizes Tesla's board for reflecting the point of view of the CEO and his family members, suggesting that if Musk desires a family business, he should refrain from conducting an IPO and operate privately.

While Lander's perspective aligns with many shareholders and critics of Musk's compensation plan, it is not the prevailing view. Numerous retail investors have signaled their support for Musk's package. Tesla has gone all out, employing various tactics such as advertisements, statements from board members, and online campaigns to secure approval for the pay package.

In recent months, Musk has shifted Tesla's focus away from traditional vehicle development to concentrate on advancements in its Full Self-Driving system, AI, and robotaxis. However, dissenting shareholders argue that Tesla's primary role should remain as an EV car company, contributing to the energy transition and combating climate change.

It is undeniable that Tesla has already achieved success, with the Model Y outselling the well-established Toyota Corolla in 2023 and its market valuation exceeding $544 billion. However, the company faces challenges, including volatile stock performance, declining sales, and concerns over Musk's involvement in political and cultural battles online. Additionally, there are lingering questions about succession planning and a weakened executive bench.

Lander's letter highlights the initial reason for approving a substantial pay package in 2018, which was to retain Musk's commitment to Tesla's success. However, critics argue that Musk's increasing business commitments beyond Tesla have diluted his focus on the company.

As Tesla shareholders prepare for the upcoming vote on June 13, the outcome will be pivotal. The decision will determine whether shareholders prioritize Musk's vision for AI and robotics or advocate for stronger governance and a return to core EV manufacturing. The stakes for Tesla's future have never been higher.

If you are a Tesla shareholder and have thoughts to share regarding Musk's compensation package or the future of Tesla, you can reach out to the author at suvrat.kothari@insideevs.com.