Shareholder group wants Tesla to link Musk's pay to ESG metrics

Reuters

Published Oct 20, 2022 01:07AM ET

By Ross Kerber

(Reuters) - Retail activist shareholder platform Tulipshare called on Tesla (NASDAQ:TSLA) Inc to tie its executive pay to environmental, social and governance (ESG) factors and said it expects to file a shareholder resolution on the matter for the electric carmaker's annual meeting next year.

Antoine Argouges, chief executive of Britain-based Tulipshare, said a decision by S&P Dow Jones Indices last spring to oust Tesla from a widely followed ESG index showed the company faces reputational and legal risks that investors will not tolerate.

"The mood of investors is super-ready to support a resolution like ours," Argouges said in an interview on Tuesday. If executive pay were tied to goals like cutting emissions or worker rights, he added, "I can tell you those people will put their effort into solving the problems in the system."

Tesla representatives did not respond to requests for comment.

While Tesla CEO Elon Musk pushed hard against S&P's decision, tweeting in May that "ESG is a scam," the company has embraced some ESG trends such as reporting its production and energy consumption and providing workforce demographic data.

To date most of Musk's pay has been tied to financial performance. In April Musk met goals worth a combined $23 billion.

More companies are linking pay to ESG metrics like cutting carbon emissions or meeting workforce diversity levels, although some studies have found few offer incentives for big changes.