Written by Liz Umlas, a senior fellow at Croatan Institute and senior advisor to IndustriALL Global Union

June 20, 2024

At Tesla’s Annual General Meeting last week, shareholders approved CEO Elon Musk’s compensation package of roughly $45 billion, or by some accounts, $56 billion, reportedly the highest ever for a US company CEO.[1] The decision of Tesla’s shareholders to reward Musk with an unprecedented pay deal understandably made headlines. But media attention to the compensation and whether it made financial sense overshadows a needed focus on the neglected workers whose labor keeps Tesla and other companies afloat.

Three days earlier, two NGOs updated their figures on a living wage in the Kolwezi region of the Democratic Republic of Congo (DRC), where workers labor to extract minerals such as cobalt and copper for Tesla and other buyer companies producing electric vehicles as part of the “green energy transition”.[2] The monthly living wage minimum needed is $501. Most workers do not make that meager amount. As Josué Kashal of CAJJ, one of the groups behind the report, asserted, “The sad reality is that workers are getting poorer, and their living conditions are deteriorating, while their multinational employers seem to be reaping huge profits. Congolese workers laboring for the world’s transition to clean energy should not be paying the price of that transition, they also deserve to benefit from the cobalt and copper boom.”

According to one source, the DRC’s entire GDP is $58 billion. That shocking inequality is the real soundbite here.

It is not news that companies involved in the clean energy transition are perpetuating some of the same human rights abuses long associated with traditional extractive enterprises such as oil, gas and mining. The grotesque imbalance of power and benefits between Tesla’s CEO being paid tens of billions of dollars a year and the wretched conditions of the workers is evidence that the industry and the market not only tolerate but cultivate abuse.

Several large institutional investors, including Norges Bank Investment Management (NBIM), the California State Teachers’ Retirement System (CalSTRS) and the Office of the New York City Comptroller, had indicated publicly they would vote against the pay deal, using terms such as “ridiculous”, “absurd”, and “exorbitant” to describe the compensation. The California Public Employees Retirement System (CalPERS) asserted corporate governance reasons for rejecting the pay, saying it was “excessive when compared to executives at peer companies…and isn’t tied to the long-term profitability of Tesla.” And the Delaware judge who threw out Musk’s pay package in January asked, “was the plan even necessary for Tesla to retain Musk and achieve its goals?”

These welcome, if outnumbered, dissents punch holes in the argument that the pay package was merited and also good for the company (they also beg the question, what is “enough” pay for someone like Musk? Will it be $60 billion next time? $100 billion?). Just because the market might “support” such swollen pay for select individuals does not make it right, or predetermined, or even necessary. We can argue about corporate governance or the “business case” for this pay deal. But the human rights argument stands out: it is simply wrong that one individual receives such an absurd share of wealth while those who keep his company—and perhaps the entire electric vehicle (EV) industry— alive are not even able to scratch out a living.

The vague argument that, in the long run it will all be worth it for society because Tesla is in the business of making “clean” vehicles, clashes with reality. Evidence is mounting that the extraction of critical minerals for the energy transition is causing or contributing to grave human rights abuses, from the displacement of Indigenous peoples, to attacks on human rights and environmental defenders to the violation of workers’ rights.[3]

It’s easy to become overwhelmed by the dimensions of the problem. But there are concrete places to start.

Shareholders must widen their perspective to include the larger context in which their companies operate. Beyond questions of whether they can tolerate, financially, any CEO’s pay package, they should demand to know the long-term impact the company is having on people and the environment. As trade unions have said for a decade, “there are no jobs on a dead planet”, which neatly sums up both the business and human rights cases for why investors should care. Companies themselves must identify, mitigate, prevent and provide remedy for their adverse impacts on human rights; the UN Guiding Principles on Business and Human Rights spell out this concept of human rights due diligence, which is now being incorporated into law in multiple jurisdictions.

The focus on executive compensation is unsurprising. Much more attention, however, needs to be paid to the plight of everyday workers.

Sources

[1] The Guardian reported that the compensation, in the form of performance-based stock options, is closer to $45 billion due to a drop in the stock price.

[2] Earlier research by the two NGOs, RAID and CAJJ, found terrible working conditions and extremely low pay for workers extracting cobalt from industrial mines in the DRC. The authors traced these minerals to electric vehicle and electronics manufacturers such as Tesla, General Motors, VW, Volvo, Samsung and Apple.

[3] It is no coincidence that Tesla, and Musk in particular, have been accused multiple times of aggressive anti-union behavior.