Tesla’s Musk Faces Showdown Over $46.9 Billion Stock Option: Shareholders Sound Off

A shareholders’ meeting is set for the 13th to decide on Elon Musk’s stock option payment. While Musk is seeking support via his X, major Tesla shareholders have been expressing opposition one after another.

According to Bloomberg, on the 9th, NBIM, which manages the Norwegian sovereign wealth fund, plans to vote against Elon Musk’s hefty CEO compensation package. NBIM said, “We still have concerns about the total compensation scale and the dilution of stock value.” NBIM had previously voted against Musk’s compensation plan when it was first proposed in 2018.

NBIM is a mega fund managing $1.7 trillion, and the fund holds 1.5 percent of all of the world’s listed companies. As of the end of last year, NBIM held 0.98% of Tesla shares, making it Tesla’s eighth-largest shareholder, according to financial information company LSEG. Many shareholders, including the largest pension fund in the United States, the California Public Employees’ Retirement System (CalPERS), oppose Musk’s payment of stock options. Advisory firms ISS and Glass Lewis have also expressed opposition.

The shareholders’ meeting on Musk’s stock option payment has turned into a rebellion of small shareholders. In 2018, Tesla decided to grant Musk stock options in 12 installments based on sales and market capitalization. Musk achieved all target performances and gained the right to purchase 340 million shares at $23.34. As of the previous trading day, the 7th, Tesla’s closing price was $177.48, allowing Musk to profit $46.9 billion.

In January, small shareholder Richard Tornetta filed a lawsuit claiming this stock option was unfair and won a preliminary victory. The claim was that a board of directors composed of Musk’s close associates provided excessive compensation. The final judgment will be made in July, but the Tesla board is trying to create evidence that shareholders support Musk through the shareholders’ meeting.

In addition to the shareholders’ meeting, Musk is concerned about the sluggish sales tax on Tesla vehicles. Recently, Tesla lowered prices in response to the low-cost offensive of competitors, including Chinese companies. This has caused a sharp drop in the price of used Tesla cars. CNBC reported on the day, citing statistics from automotive market research firm iSeeCars, that the price of used Tesla cars in the U.S. fell by 28.9% in March compared to the previous year. The overall average fell by just 3.6%, making Tesla’s drop the largest among major car brands. Analyst Karl Brauer of iSeeCars said, “A dramatic drop in used electric vehicle values, largely driven by Elon Musk’s aggressive price cuts on new Teslas, reflects how much influence Tesla continues to have on the EV market.”