The rescinding of Tesla, Inc. TSLA CEO Elon Musk‘s 2018 compensation plan by the Delaware Chancery Court last week sparked controversy. Billionaire investor and hedge fund manager Leon Cooperman has now suggested that Musk might be receiving excessive compensation.
What Happened: While stating that he hasn’t closely followed Musk’s compensation issue, Cooperman remarked, “He’s a genius but he’s overcompensated.” Cooperman’s hedge fund, Omega Advisors, does not hold a position in Tesla.
Referring to fellow billionaire Warren Buffett, Cooperman mentioned that boards of directors often hire pension or compensation consultants who tend to escalate pay packages. “Compensation is excessive in most companies. Managers get paid even when they fail. That’s the big battle I have to fight as an investor,” he stated.
See Also: Everything You Need To Know About Tesla Stock
Clarifying that he is not an activist investor but rather a passive one who invests in companies he understands and that are reasonably valued, Cooperman added, “I can find plenty of them as most of the ones I am involved with have been through a bear market.”
Why It’s Important: Not everyone on Wall Street shares Cooperman’s perspective. Ark Invest’s Cathie Wood recently defended Musk, stating that he accomplished the “Herculean” task the board entrusted him with, thereby earning his compensation.
Musk himself expressed dissatisfaction with the developments surrounding his $56 billion compensation plan. He hinted at potentially relocating Tesla’s place of incorporation to Texas, where the company is headquartered. The billionaire also lamented the drawbacks of being a public company.
Gary Black, a Tesla investor and Managing Partner at Future Fund, suggested that the board should view the dispute over Musk’s pay package as an opportunity to devise a new award and grant him 25% voting control in the company.
Tesla ended Tuesday’s session 2.23% higher at $185.10, according to Benzinga Pro data.
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