‘There’s rarely been as egregious a flaunting of independent shareholder governance as this’

New York Metropolis Comptroller Brad Lander, who oversees 5 public pension funds with $242 billion in property, has a message for the Tesla board and CEO Elon Musk: the EV maker is publicly traded, so it ought to cease behaving like a family-owned enterprise with Musk on the head of the desk.

“I don’t know what genuinely independent board would have a CEO who can be CEO of two different giant corporations,” Lander instructed Fortune. “Each different main publicly traded firm with a genuinely independent board—and plenty of of them with not that independent of a board—anticipate their CEO to be a full-time CEO for his or her firm.”

Lander and a coalition of seven other investors are urging Tesla shareholders to vote down Musk’s $47 billion stock-option package deal on the firm’s June 13 shareholder assembly. (His pay plan was initially valued at $55.8 billion however it has fluctuated with the corporate’s inventory worth efficiency.) The traders filed a notice this week spelling out a collection of issues about governance on the firm, and what Lander referred to as Musk’s “stratospheric” compensation.

One of them is that Musk doesn’t work at Tesla full-time, mentioned Lander, including that there’s little doubt Musk is distracted by his different corporations, which embrace SpaceX, The Boring Firm, xAI, X, and Neuralink. He was additionally incredulous that the Tesla board, after being served up a rebuke about its independence by a Delaware Chancery Courtroom choose, would once more ask traders to approve a compensation plan that can pay Musk billions. Delaware choose Kathaleen McCormick in January rescinded Musk’s pay and ruled that the board, which incorporates Musk’s brother Kimbal and others with shut private and monetary ties to Elon Musk, lacked independence in approving the comp plan and that Musk managed the method and dictated the phrases.

“It takes a lot to get the Chancery Courtroom to say that,” mentioned Lander. “For the board to then flip round and say, ‘We’re ignoring the court docket and we’re transferring ahead with this stratospheric pay package deal and we’re not going to do something about these distractions’” is past the pale.

“I’ve by no means seen a board simply wantonly ignore a court docket on this means,” he added.

Tesla didn’t instantly reply to Fortune’s request for remark. Tesla Chair Robyn Denholm has pushed back against the court’s ruling and mentioned that it was “BS” that she was too near Musk to be thought-about independent.

In Lander’s view, what Tesla does may have implications that spill throughout different corporations and founders who would slightly hold shut management of their corporations whereas nonetheless getting access to the capital markets. “This isn’t shareholder governance as envisioned by shareholder capitalism,” he mentioned.

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People have been lucky to have flourishing capital markets for generations as a result of of the mannequin of independent governance by which shareholders can make investments and imagine that board members will act as their independent representatives in relation to firm administration groups, he mentioned.

However he warned that isn’t occurring at Tesla: “There’s rarely been as egregious a flaunting of independent shareholder governance as this.”

And whereas Lander and the opposite traders aren’t lobbying to switch Musk, the Tesla CEO is “completely” replaceable, mentioned Lander. Nonetheless, he would slightly see the board negotiate an “applicable compensation package deal” with Musk and for Musk to supply the extent of consideration and concentrate on Tesla that the job requires.

“He’s little doubt certified to be the Tesla CEO, however CEO succession at publicly traded corporations of this scale occurs on a regular basis,” mentioned Lander. “There are different CEOs who may do it if this CEO isn’t going to present it his full-time consideration and undertake a profitable however at the very least vaguely affordable compensation package deal.”

This story was initially featured on Fortune.com