A serious proxy advisory firm is urging Tesla Inc. shareholders to reject a proposed $56 billion pay package for Chief Executive Officer Elon Musk, a blow to the electrical automotive maker’s board.
Glass Lewis & Co. made its suggestion in a report released Saturday, citing the “excessive size” of the salary deal and the dilutive effect upon exercise.
“Mr. Musk’s list of extraordinarily time-consuming projects unrelated to the company was well documented even before the 2018 grant and was only expanded by his high-profile purchase of the company now known as X,” the Glass Lewis report said.
The suggestion to large institutional investors could influence their vote on Musk’s salary on the automaker’s annual meeting on June 13. If the proposal is rejected, the CEO could Threats To develop products outside of Tesla.
Next month’s vote shall be the second time Musk’s pay package has been put before shareholders. The compensation deal was originally worked out in 2018, but earlier this yr a Delaware judge voided it, saying investors had not been fully informed of key details.
If Tesla’s board can show that the compensation deal still has broad support, that would assist in an appeal against the ruling. On the opposite hand, a loss can be a serious embarrassment and would show that investors are losing faith in Musk’s leadership. The vote is advisory only, meaning Tesla can ignore it.
About three-quarters of investors supported Musk’s salary agreement six years ago. Glass Lewis really helpful that they reject the deal on the time, arguing that it was too expensive and would dilute other shareholders’ stakes.
Tesla is trying public criticism of Musk’s compensation with a campaign to win shareholder support. Chief Executive Robyn Denholm is reaching out to large institutional investors, while a “Vote Tesla” website is appealing to the corporate’s army of small shareholders.
Tesla can be asking its shareholders to vote next month on a proposal to maneuver the corporate’s charter from Delaware to Texas. Glass Lewis really helpful voting against that move, while also voting against the re-election of board member Kimbal Musk, Elon Musk’s brother.
