Investor Ross Gerber, of Gerber Kawasaki Wealth and Investment Management, has publicly criticized Tesla Inc. (NASDAQ:TSLA) for its spending priorities. His remarks come in light of reports that the company is running digital advertising campaigns to promote CEO Elon Musk‘s controversial compensation plan, valued at $900 billion. This criticism arises as Tesla faces challenges in selling vehicles across key markets.
Gerber expressed his concern on social media platform X, questioning why an automotive company that is “struggling to sell cars” would allocate resources to advertise a pay package. His comments coincide with Tesla’s online campaigns aimed at showcasing Musk’s contributions to the company ahead of the annual shareholders meeting scheduled for March 2024. During this meeting, shareholders will vote on Musk’s lucrative compensation plan, a pivotal decision for the company’s future.
Tesla’s sales figures have been declining in significant markets, particularly in Europe and China. The company’s struggles are compounded by Musk’s political engagements, which some analysts believe have adversely affected sales. A recent analysis indicates that Musk’s outspoken right-wing activism, including a $250 million contribution to former President Donald Trump’s campaign, may have cost Tesla nearly 1 million car sales in the United States.
The investor community is divided over Musk’s proposed compensation package. Cathie Wood, founder of Ark Invest, supports the plan, describing Musk as “the most productive human being on earth.” Wood believes the package represents a “win-win” for all parties involved. Similarly, Michael Dell, founder of Dell Technologies Inc. (NYSE:DELL), noted that Musk’s stock award is contingent upon achieving ambitious market capitalization and operational goals. He stated, “If he falls short, he gets nothing. If he succeeds, shareholders will win big through unprecedented value creation.”
On the other hand, Norway’s sovereign wealth fund, Norges Bank Investment Management, which holds a 1.12% stake in Tesla, opposes the compensation plan. The fund announced its intention to vote against Musk’s proposal, citing concerns about the overall size of the award, potential dilution, and the lack of measures to mitigate risks associated with Musk’s leadership.
Gerber, who was once a strong advocate for Tesla, has criticized the board of directors for prioritizing Musk’s interests over those of the company and its shareholders. He described the plan as “absurd” and emphasized the need for a more balanced approach to executive compensation.
Despite the controversy surrounding Musk’s pay package, Tesla’s stock remains resilient. Shares rose by 4.01% on Wednesday, closing at $462.07, with a slight increase of 0.11% overnight. The stock has received favorable ratings in terms of momentum and quality, suggesting continued investor interest ahead of the important shareholders meeting.
As the vote approaches, stakeholders are eager to see how this pivotal decision will shape the future of Tesla and its leadership under Musk.
