From pay packages to board control: Tesla faces investors’ legal scrutiny
The SOC Investment Group, which advises union-backed pension funds holding Tesla stock, has urged NASDAQ to open a probe into the automaker’s handling of executive pay. In a letter to the exchange, the group questioned Tesla’s transparency with shareholders and raised concerns over the recent $29 billion equity award granted to CEO Elon Musk.
SOC Group expressed “serious concerns,” according to the Fortune report. The Group argued that Tesla’s board sidestepped NASDAQ’s listing standards by approving what it called the “2025 CEO Interim Award” for Musk without seeking shareholder approval. According to the group, the multibillion-dollar equity grant reshaped the company’s pay structure to such an extent that it should have been subject to a vote of investors.
While the award places some limits such as delaying vesting until two years after the grant and prohibiting Musk from selling shares for five years since it does not tie his payout to clear performance goals. 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,” as per the Fortune report.
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Patel further stated, “admittedly, this is the first time I’ve flagged something like this to Nasdaq, [and that’s] because it was a very specific listing standard.” Her understanding of the Nasdaq standard is that “this is exactly what it was designed to avoid.”
The Group has been in long-standing dialogue with Tesla, frequently pressing the company on executive compensation, governance standards, board independence, and treatment of workers.
The debate over Musk’s pay comes on the heels of a series of high-profile developments. Earlier this month, analysts Dan Ives of Wedbush Securities and Gary Black of Future Fund LLC praised the $29 billion award, arguing it could help stabilize Tesla’s stock and ensure Musk’s leadership through the end of the decade (2030). Still, critics pointed out that the package lacked performance-based conditions. Toward the end of August, the issue drew further attention when the Delaware Supreme Court set oral arguments over Musk’s earlier $56 billion pay plan, which had been voided by a lower court in 2024.
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The SOC Investment Group, previously operating as CtW Investment Group, advises union-backed pension funds that represent more than two million workers where several of which hold stakes in Tesla.
The Group has consistently challenged Tesla on governance and pay practices, with a particular focus on Musk’s compensation. It has advocated for shareholders over the years to turn down what it considers excessive awards, such as the record $56 billion options package. Additionally, the organization has criticized situations in which it believes Tesla violated fundamental governance principles or circumvented appropriate shareholder consent.
Additionally, it has pushed investors to vote against the reelection of directors like James Murdoch and Kimbal Musk, claiming that the board is not always acting in the best interests of shareholders and is not independent from Elon Musk. Together with other investors, it has also filed resolutions requesting that Tesla improve its labor rights practices, including a commitment to international labor standards and a promise not to obstruct worker organizing.