May 27, 2024 03:19 PM EDT
Glass Lewis recommended Tesla shareholders reject Elon Musk's $56 billion pay package, citing its excessive size, dilutive effect, and Musk's numerous other projects, including his purchase of Twitter.
The Tesla board proposed the compensation plan, tied to the company's market value rising to $650 billion within ten years, without a salary or cash incentive. The plan faced criticism for the board's close ties to Musk and was previously revoked by a Delaware judge.
Glass Lewis also opposed relocating Tesla's incorporation to Texas due to uncertain benefits and risks. The board chair defended the pay package, citing the company's growth, while advising against Kimbal Musk's reelection and supporting James Murdoch's reelection.
Proxy advisory firm Glass Lewis recommended on Saturday that Tesla (TSLA.O) shareholders reject the proposed $56 billion pay package for CEO Elon Musk, which would be the largest CEO compensation package in corporate America if approved. The firm cited several reasons, including the "excessive size" of the pay deal, its dilutive effect when exercised, and the concentration of ownership. Additionally, it pointed out Musk's numerous time-consuming projects, which have increased following his high-profile purchase of Twitter, now known as X.
The compensation plan was suggested by Tesla's board of directors, which has faced criticism for its tight relationship with the billionaire. The program does not include a salary or cash incentive. Instead, benefits are determined by Tesla's market value, which may increase to $650 billion in ten years starting in 2018. Based on LSEG statistics, the corporation is presently valued at around $571.6 billion.
The first compensation package was revoked in January by Delaware's Court of Chancery Judge Kathaleen McCormick. Then, Musk made an attempt to have Texas take Delaware's position as Tesla's state of incorporation.
Glass Lewis also criticized the proposed relocation to Texas, arguing that it would expose shareholders to uncertain benefits and additional risks. Tesla has requested its investors to reaffirm their approval of the CEO's compensation package.
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Robyn Denholm, the head of Tesla's board, said in an interview this month that Musk is deserving of the compensation package since the business has exceeded its high sales and stock price goals.
In 2008, Musk was appointed CEO of Tesla. According to an online campaign website, Vote Tesla, he has improved the firm's performance in the last several years, leading it to a $15 billion profit from a $2.2 billion deficit in 2018. Additionally, the company has manufactured seven times more automobiles.
In addition, the proxy counsel advised shareholders to vote against the reelection of Kimbal Musk, a board member and the brother of the billionaire, while supporting the reelection of James Murdoch, the former CEO of 21st Century Fox.
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