The SOC group, formerly known as the CtW Investment Group, works with pension funds sponsored by a coalition of unions representing over 2 million members; many of those funds are Tesla investors.
The objections lobbied by SOC Investment Group in its letter have nothing to do with either feature of the grants. The group argues that the Tesla board dodged shareholder approval for the package, in contravention of Nasdaq listing policy.
Tejal Patel, Executive Director of the SOC Investment Group, told Fortune in an interview 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.” Acknowledging that such issues are usually raised with the Securities and Exchange Commission, she added, “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 SOC Investment Group emphasizes that when Tesla shareholders approved the 2019 Equity Incentive Plan, company disclosures explicitly excluded Musk from eligibility, stating that his compensation would be exclusively tied to the extraordinary 2018 award. “When shareholders voted on the 2019 Plan it is likely that, based on the available disclosures and research, they did not believe they were voting on an equity plan that would cover compensation to Mr. Musk,” the SOC letter notes, “precisely because of the ‘truly extraordinary’ nature of the 2018 CEO Performance Award.”
The SOC letter also notes that Tesla’s 2019 proxy statement repeated multiple times that the 2019 plan was not intended to cover awards to Musk. Furthermore, the letter mentions that major proxy advisory firms indicated that the 2018 CEO Performance Award was “intended to be the sole means of compensation for Mr. Musk, relying on the Company’s disclosures.”
Therefore, SOC writes, the 2025 CEO Interim Award “appears to expand the class of participants under the 2019 Plan in manner that would be sufficiently material to require a separate shareholder vote.”
The letter also warns that Tesla’s 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.
The group has also joined with other investors in co-filing shareholder resolutions calling for Tesla to adopt comprehensive labor rights policies, including non-interference with worker organizing and compliance with global labor standards. They have been involved in webinars and resolutions highlighting risks related to Tesla’s approach to unions and labor issues across several countries.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
