In a significant development leading up to Tesla's upcoming shareholder meeting on June 13, a group of major pension funds, including those managing New York City's pension systems, have sent a letter to Tesla shareholders recommending that they vote against the reelection of Kimbal Musk and James Murdoch, as well as Elon Musk's massive stock package.

The letter, which was written by Brad Lander, the Comptroller of the City of New York, on behalf of several NYC city employees pension funds, highlights several concerns. The pension funds argue that Musk's proposed pay package does not serve the best interests of Tesla shareholders. They contend that the package is excessive and lacks any incentivizing effect. The rushed manner in which the reimplementation of the package was decided upon, by a single director, is also criticized in the letter, echoing a prior decision by the Delaware Court of Chancery.

The letter points out that the original purpose of the reward was to ensure Musk's full-time commitment to Tesla for a ten-year period. However, it argues that Musk's outside business commitments have only increased since the package was introduced in 2018. The letter describes Musk as a "part-time CEO" due to his involvement in multiple companies such as Tesla, SpaceX, The Boring Company, NeuraLink, xAI, Twitter, and the Musk Foundation.

Additionally, the letter raises concerns about Musk's decision-making, including his split attention on his various ventures, his utilization of Tesla employees for work related to other companies, and his poaching of engineers from Tesla for his other ventures. The letter emphasizes the lack of independence from Tesla's directors, particularly highlighting the close relationships between Kimbal Musk and James Murdoch with Elon Musk, which may compromise the board's objectivity.

Furthermore, the letter alleges a decline in Tesla's performance in recent times, linking it to Musk's shift of focus towards Twitter. It presents evidence of drops in various metrics, both financial and otherwise, which suggest disorganization and a lack of leadership within the company.

The group of pension funds had previously sent a letter to Tesla's board chair in April outlining their concerns and requesting a meeting. However, they did not receive a response. The current letter serves as a public statement to urge shareholders to vote against the proposed pay package and the reelection of Kimbal Musk and James Murdoch.

The success of these votes will heavily rely on the decisions made by institutional investors. One of the significant institutions openly lobbying against the approval of these proposals reflects a widespread sentiment among financial institutions. The letter encourages shareholders to reject all board members when given the opportunity to vote, underlining the lack of oversight within the company.

The upcoming shareholder meeting will play a crucial role in determining the future direction of Tesla. As the transition to electric vehicles gains momentum, having a strong and stable Tesla is vital for driving this transition forward. The concerns raised by the pension funds regarding corporate governance and Musk's behavior have raised questions about his suitability as CEO.

It is important to note that the information and opinions in this article are based on the letter sent by the pension funds and the context provided by the author. The final outcomes of the shareholder votes and the subsequent impact on Tesla's governance will be determined in due course.

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