Nasdaq Faces Pressure to Investigate Tesla's $29 Billion Equity Package for Elon Musk

Tesla's $29 billion equity package for CEO Elon Musk has sparked controversy over compliance with Nasdaq listing rules and transparency in executive compensation. SOC Investment Group has written to Nasdaq, urging it to investigate and take action against the company. The group argues that the package should have gone to a shareholder vote and that the board circumvented shareholder rights. Critics also note that the award lacks measurable performance goals, making it a "fog-the-mirror grant."

Tesla's recent $29 billion equity package for CEO Elon Musk has drawn significant attention and controversy over compliance with Nasdaq listing rules and transparency in executive compensation. The SOC Investment Group, a prominent shareholder advocacy group, has formally requested Nasdaq to investigate and take appropriate remedial action against Tesla for the equity grant [1].

The SOC Investment Group, formerly known as the CtW Investment Group, has expressed serious concerns about the compensation package, alleging that the Tesla board may have bypassed Nasdaq’s rules when it awarded Elon Musk the "2025 CEO Interim Award" [2]. The group argues that this award should have been put to a shareholder vote, as stipulated under Nasdaq’s rules for major changes to executive pay plans. The SOC letter notes that the 2025 award appears to expand the class of participants under the 2019 plan in a manner that would require a separate shareholder vote [1].

Tesla's board approved Musk’s new equity package under the company’s 2019 Equity Incentive Plan, largely as compensation for his previously awarded—and overturned—$56 billion options package from 2018, known as the “2018 CEO Performance Award” [2]. The new package will only apply if Musk and Tesla lose on appeal in Delaware. The package includes restrictions that protect shareholders, such as vesting after two years and a five-year holding period for vested shares. However, critics argue that the award lacks measurable performance targets, making it a "fog-the-mirror grant" [2].

The SOC Investment Group emphasizes that when Tesla shareholders approved the 2019 Equity Incentive Plan, company disclosures explicitly excluded Musk from eligibility [1]. The group argues that the board has indicated further interim awards could follow, potentially bypassing shareholder votes while the Delaware case, the so-called Tornetta litigation, is pending. The SOC letter urges Nasdaq to act to "restore the rightful balance between shareholder and management’s interests," prevent dilution, and ensure executive compensation transparency [2].

The SOC Investment Group has a history of active engagement with Tesla, focusing on issues such as executive compensation, governance, and labor rights. The group has repeatedly opposed large pay packages for Musk and has requested investigations by regulators into Tesla’s governance practices [2]. Tesla has not publicly responded to the letter and did not immediately respond to Fortune’s request for comment [2].

References:
[1] https://timesofindia.indiatimes.com/technology/tech-news/tesla-investors-urge-nasdaq-to-probe-elon-musks-29-billion-stock-award-amid-serious-concerns-over-/articleshow/123484737.cms
[2] https://finance.yahoo.com/news/tesla-shareholder-group-urges-probe-183717619.html