Proxy advisory firm Glass Lewis has recommended that Tesla (TSLA.O) shareholders reject the proposed $56 billion pay package for CEO Elon Musk, which would be the largest in corporate America if approved.
Glass Lewis cited concerns over the “excessive size” of the package, its dilutive effect upon exercise, and the concentration of ownership. Additionally, the firm noted Musk’s involvement in numerous time-consuming ventures, including his recent acquisition of Twitter, now known as X.
The controversial pay package, proposed by Tesla’s board of directors, offers no salary or cash bonus but is tied to Tesla’s market value reaching $650 billion within a decade starting from 2018. Currently, Tesla is valued at approximately $571.6 billion, based on LSEG data.
In January, the original pay package was voided by Judge Kathaleen McCormick of Delaware’s Court of Chancery. Following this decision, Musk sought to relocate Tesla’s state of incorporation from Delaware to Texas, a move Glass Lewis criticized for providing “uncertain benefits and additional risk” to shareholders.
Tesla has called on shareholders to reaffirm their support for the compensation plan. Tesla’s board chair, Robyn Denholm, defended the pay package in a recent interview with the Financial Times, stating that Musk deserves it due to Tesla achieving significant revenue and stock price targets.
Elon Musk, who has been Tesla’s CEO since 2008, has led the company from a $2.2 billion loss in 2018 to a $15 billion profit, with a sevenfold increase in vehicle production. This improvement is highlighted on an online campaign website, Vote Tesla, which promotes shareholder approval of the compensation package.
