Some Tesla shareholders say siphoning chips from Nvidia is further proof that Elon Musk doesn’t deserve a multibillion-dollar pay package

• Elon Musk recently admitted on X that he delayed shipping thousands of Nvidia chips to Tesla.

• Musk also hopes Tesla investors will vote to reinstate his massive package of stock options.

• Several Tesla shareholders who protested the pay package say he still doesn’t deserve it.

Several Tesla institutional shareholders told Business Insider that Elon Musk’s decision to redirect a shipment of valuable Nvidia chips away from the EV company is further proof that the CEO does not deserve a multi-billion dollar salary package.

In May, a group of eight Tesla shareholders wrote a letter urging other investors to vote against Musk’s compensation package. The group is just a faction of a growing number of investors who said they plan to vote against the deal.

This package, now valued at around 46 billion dollars, was slaughtered in January by the Chancellor of the Court of Chancery of Delaware Kathaleen McCormick, who said the process for arriving at this “unfair price” for Musk was “deeply flawed.”

Tesla shareholders will vote on June 13 about the possibility of reinstating Musk’s agreement.

But less than two weeks before the shareholder vote, CNBC reported that Musk misappropriated a $500 million shipment of Nvidia chips, which are essential to power Tesla’s artificial intelligence technology and its X social media platform.

Nvidia’s internal memo indicating Musk’s delay in acquiring Nvidia chips was from December, CNBC reported — months before the April earnings conference call in which Tesla’s CEO insisted that the automaker is an AI company. He also stated on the call that he would aggressively expand the number of Nvidia chips in Tesla from 35,000 to 85,000 units by the end of 2024.

In response to the CNBC report, Musk said on X that “Tesla had nowhere to send the Nvidia chips to power them, so they would have sat in a warehouse.”

“The southern extension of Giga Texas is almost complete. This will house 50,000 H100s (Nvidia chips) for FSD training,” Musk added, referring to Tesla Full Self-Driving resource – a key component of the company’s promise to deliver autonomous taxis.

But some of the shareholders behind the effort to nullify Musk’s big payout aren’t convinced.

“The diversion of Nvidia processors to Tesla,” Tejal Patel, executive director of SOC Investment Group, wrote an email to BI.

Patel added: “The main questions are: why were these valuable processors ‘just sitting’ in the first place, and if it was an operational issue, why wasn’t this anticipated by management? Whatever decision-making processors were supposed to do taking unused by Tesla would be up to CEO Musk.”

Musk did not respond to a request for comment from Business Insider.

The SOC Investment Group is one of the eight shareholders who signed a letter urging investors to vote against ratifying Musk’s stock option package and against re-electing Musk’s brother Kimbal and James Murdoch to seats on Tesla’s board of directors.

The group – made up of pension fund managers, an asset management company and a bank – also includes Amalgamated Bank, AkademikerPension, Nordea Asset Management, New York City controller Brad Lander, SHARE, Unison and United Church Funds .

In a statement to BI, Lander wrote that Musk’s decision to divert Nvidia chips from Tesla “should be a “red flag for investors.”

“This sudden move adds to growing concerns about Musk’s commitment to Tesla and highlights his blatant conflicts of interest,” he wrote. “There is a pressing need at Tesla for a genuinely independent board that ensures Musk prioritizes the company’s interests.”

Matthew Illian, director of responsible investing at United Church Funds, similarly criticized Musk’s decision to delay shipments of Nvidia chips, saying it was “further proof” that the payment package “never achieved its purpose of maintaining the attention of Tesla’s CEO.” “

“This is about Elon building an empire for himself with investors’ money and we can’t let that happen,” he wrote in an email to BI.

It’s not immediately clear how many Tesla shares the eight shareholders own in total.

Five of the eight shareholders, including Amalgamated Bank, Unison, Nordea, New York City Retirement System and United Church Funds, represent more than 4.9 million Tesla shares.

As of Thursday, those shares were worth more than $878 million.

Spokespeople for SHARE, Nordea and Unison could not be reached for comment or did not immediately respond.

In addition to the eight shareholders, the California Public Employees’ Retirement System (CalPERS), which owns about 9.5 million Tesla shares, signaled it would vote against Musk’s pay package.

“We don’t believe compensation is commensurate with the company’s performance,” CalPERS CEO Marcie Frost told CNBC.

A CalPERS spokesperson declined to comment when asked about Musk’s decision to divert the shipment of Nvidia chips.

Read the original article at Business Insider