The SOC Investment Group, a representative of union-backed pension funds holding Tesla shares, has demanded a formal investigation by NASDAQ into Tesla Inc. regarding a recent $29 billion equity grant to CEO Elon Musk. This move comes as a response to concerns over Tesla’s compliance with executive compensation rules and shareholder transparency.
Tesla Faces Scrutiny Over Musk’s New Pay Package Rules
The SOC Group has expressed “serious concerns” over Musk’s new compensation package, alleging that Tesla’s board circumvented NASDAQ listing rules when granting Musk the “2025 CEO Interim Award”. They claim that this equity award should have necessitated a shareholder vote, as it significantly altered compensation plans.
Key Concerns
- The new package lacks strict performance requirements for Musk.
- Although the package imposes restrictions, such as shares vesting only on the second anniversary of the grant and Musk being barred from selling vested shares for five years, it has raised questions about the board’s decision-making process.
Statements from the SOC Investment Group
Tejal Patel, executive director of the SOC Investment Group, stated that the “real issue is the fact that the original plan … was pretty clear in the disclosures that the company did not intend to include Elon Musk in that plan.” The group has a history of engaging with Tesla, raising concerns about executive pay, governance practices, board independence, and labor rights.
Musk’s Pay Saga Deepens
This development follows a series of events surrounding Musk’s compensation package. Earlier in August, analysts reacted positively to Musk’s new $29 billion pay package, noting that it could alleviate one of the factors holding back the price of Tesla’s shares. However, the package was also criticized for its lack of performance targets.
Ongoing Investigations and Court Cases
- The Delaware Supreme Court has scheduled oral arguments over Musk’s $56 billion compensation package, which a trial court struck down in 2024.
- The SEC is also investigating Musk’s compensation package, adding to the ongoing scrutiny of Tesla’s governance practices.
Market Performance and Rankings
Tesla’s weak performance has led to a ranking in the 79th percentile for momentum and the 10th percentile for value, according to Benzinga’s Edge Rankings. The company’s shares have been under pressure due to concerns over governance and executive compensation.
Related News
- Elon Musk has announced that the Model Y L might not be coming to the US, drawing mixed reactions from Tesla fans.
- The SOC Investment Group has a history of opposing large pay packages for Musk and has previously called for investigations into Tesla’s governance practices.