Musk must be expelled from Tesla’s board of directors

Musk must be expelled from Tesla’s board of directors

July 3, 2020 0 By autotimesnews

Consulting company Pensions & Investment Research Consultants (PIRC), which advises Tesla shareholders, urged them to remove Elon Musk from the company’s board of directors and demand the termination of the multi-billion dollar agreement on his bonuses. It was also proposed to dismiss from the board of directors its current leader, Robin Denholm, for connivance with Mask.

The appeal of PIRC consultants to Tesla shareholders was reported by the British The Guardian. Shareholders are invited to vote against the re-election of Musk to the Tesla Board of Directors. Consultants advise three reasons why Mask should be kicked out of the board. The main reason is the compensation package of 20.3 million stock options, divided into 12 tranches, which Musk agreed with the Tesla Board of Directors in 2018.

According to PIRC, the agreement “unjustly enriches” the Mask, so investors should vote against the bonus deal.

“The board of directors, including CEO Elon Musk, awarded themselves too large compensation packages over the past three years, which supposedly allowed them to enrich themselves at the company’s expense,” PIRC said, adding that the deal has already led to one lawsuit .

This, apparently, is about a lawsuit by one of Tesla’s shareholders – the Pension Fund, which represents the interests of the Detroit police and firefighters – which was filed in mid-June in Delaware. The essence of the lawsuit is the same as the appeal of PIRC: the board of directors abuse its authority and illegally enrich itself. At the same time, it is not only about the compensation package of the Mask himself, but also about payments to other members of the board of directors. In particular, two independent directors who are not Tesla employees received grants in the amount of more than $ 8.7 million from the company in 2018. The fund requires in its lawsuit to recognize all these payments as illegal.

Shareholder irritation can be understood. If Musk fulfills all the conditions of the agreement with the board of directors, then he will be able to get about $ 56 billion over the next 10 years. This is an unprecedented compensation package in the history of world business.

At the same time, Musk does not receive regular salaries for managing the company – only bonuses that are tied to specific market achievements of the company. And they are more than convincing – the cost of Tesla is constantly growing and has almost caught up with the cost of the most expensive automotive brand on the planet – Toyota. The company’s revenue is also growing rapidly – in the first quarter of 2020, it amounted to $ 5.99 billion, compared with $ 4.54 billion for the same period last year.

Shareholders are satisfied with these results, but, apparently, believe that this can be achieved at a lower cost – more modest bonuses.

It is also noteworthy that the bonus agreement was concluded in 2018 and for two years it did not cause protests from the shareholders. Claims and claims began immediately after Musk received the right to the first of 12 bonuses – he amounted to $ 770 million – this happened in April, when Tesla’s average market capitalization over the past 6 months amounted to $ 100 billion. At the end of May, the Tesla board of directors officially unblocked for Mask to receive a bonus by notifying the US Securities and Exchange Commission. Two weeks later, the Detroit Pension Fund filed a lawsuit.

By the way, Musk is unlikely to take advantage of this bonus in the next 5 years.

The claims of PIRC consultants are also triggered by Mask’s activity on Twitter. It is claimed that Mask’s tweets create “unnecessary reputation risk for the company” and have already cost her millions of dollars. What is true – in 2018, Tesla and Musk were forced to pay fines of $ 20 million for resolving the scandal with the SEC, when Musk wrote a post about the alleged readiness of a certain Arab fund to buy all shares of the company from the exchange. At the same time, Musk was forced to part with the chairman of the board of directors of Tesla.

Finally, PIRC is concerned about Musk’s tweets on COVID-19 and his overall position regarding the need to comply with quarantine measures.

“Mr. Musk was a clear adversary of COVID-19 quarantine and demanded that workers return to work during quarantine without sufficient precautions and protection, despite protests from workers,” consultants said. This problem was compounded by the fact that several Tesla employees became ill with the coronavirus after Musk forced everyone to go to work, according to PIRC. This is fraught with lawsuits.

Advisers also called on investors to vote against the re-election of Robin Denholm as chairman of the Tesla board of directors. She replaced Mask at this post when he was forced to leave him in November 2018 as part of an agreement with the SEC. PIRC believes that Denholm has the primary responsibility for concluding an unfair agreement with Musk on his reward.

The annual general meeting of shareholders of Tesla was supposed to be held on July 7, but the board of directors of the company on Sunday postponed its holding until September.