Pirc said the deal had exposed the company to legal action, alleging that: “The board of directors, including CEO Elon Musk, has given itself excessive compensation over a three-year period that would have allowed administrators to “enrich themselves at the expense of the company”. ”
The shareholder advisor called on investors to vote against Musk’s re-election to the board due to the compensation agreement and warned that it posed “a serious risk to the reputation of the company and its shareholders ”
Pirc said Musk’s frequent controversial Twitter blasts cost Tesla millions of dollars in settlements and also posed “unnecessary corporate reputational risk”.
Musk was sued last year for $ 190 million in libel damages for derogatory tweets about British caver Vernon Unsworth, who helped rescue 13 people trapped in a Thai cave. A jury concluded that the tweets did not meet legal standards for defamation and Musk was not held responsible for the damages.
In 2018, the U.S. Securities and Exchange (SEC) regulator fined Musk and Tesla $ 20 million for CEO tweets that he planned to make the company private at a substantial premium over share price, causing the share price to soar. As part of the SEC deal, Musk was forced to step down as president of Tesla.
The SEC ruled: “In truth, Musk knew that the potential transaction was uncertain and subject to many contingencies. Musk had not discussed the specific terms of the deal, including the price, with potential financial partners, and his statements about the possible transaction actually lacked an adequate basis. ”
Pirc said the episode “sparked abuse of the stock market, with the SEC alleging that Musk had lied to investors. Musk and Tesla have settled these claims with the SEC, paying $ 40 million, causing financial damage. ”
The Pirc shareholder report also raised concerns about Musk’s tweets in opposition to Covid-19’s foreclosure measures. “Mr. Musk was a staunch opponent of Covid-19 quarantine and allegedly forced workers to return to work during quarantine without adequate precautions / protection and despite workers’ protests,” said Pirc. “This concern is heightened because it has also been reported that several Tesla employees have tested positive for Covid-19 since their return to work. ”
Investors were also asked to vote against the re-election of Robyn Denholm as president of Tesla. She succeeded Musk when he was forced to resign in November 2018. Pirc said she would have to resign due to her role in overseeing Musk’s compensation as a non-executive independent chairperson and as a member of the remuneration committee.
Tesla’s annual general meeting was scheduled to take place on July 7, but the company postponed voting until Sunday until September.
• This article was modified on July 1, 2020 to remove an incorrect description of Elon Musk as the founder of Tesla. Musk is included in the company’s co-founders list.