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Dive Brief:

• A group of Tesla shareholders is asking other shareholders to reject the ratification of CEO Elon Musk’s pay package citing a “material governance failure,” according to a letter filed with the Securities and Exchange Commission on May 20.
• The shareholders — which include Amalgamated Bank, Nordea Asset Management and New York City Comptroller Brad Lander — claim the electric vehicle maker’s board is “overly beholden” to Musk and that it is “stacked” with directors that have personal ties to the tech leader.
• “Even as Tesla’s performance is floundering, the Board has yet to ensure that [Tesla] has a full-time CEO who is adequately focused on the long-term sustainable success of our Company,” the letter reads.

Dive Insight:

The group is also urging other shareholders to vote against reelecting directors Kimbal Musk, Elon Musk’s brother, and James Murdoch, who the group alleges is a “longtime personal friend of the CEO.”

The letter also refers to Musk’s January post on X, in which he said he was “uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control.”

“Unless that is the case, I would prefer to build products outside of Tesla,” Musk said in the post. “You don’t seem to understand that Tesla is not one startup, but a dozen. Simply look at the delta between what Tesla does and GM.”

In its proxy statement filed last month, Tesla’s board asked shareholders to reinstate Musk’s $56 billion pay package, which was voided by a Delaware judge in January. Musk has delivered “extraordinary value” for shareholders in accordance with the deal, a presentation in support of the proposal states, claiming that under his direction, the company is “well-positioned to lead in large and rapidly growing markets.”

However, some investors plan to back Musk’s pay package, including Scottish Mortgage Investment Trust, Reuters reported Thursday.

In 2018, 73% of shareholders voted in favor of Musk’s compensation plan. But the board may face a tougher battle to get it approved this year, as Tesla has reported declining deliveries and substantial layoffs. The vote will take place during an annual meeting on June 13.