Tesla’s board is practically begging shareholders to approve CEO Elon Musk’s $45 billion compensation package at next month’s annual meeting. But not everyone agrees, and now the electrical automobile maker is on the defensive.
In a 71-page report released over the weekend, proxy adviser Glass Lewis urged shareholders to vote against Musk’s pay package due to, amongst other things, its “sheer size” and the dilutive effect on current shareholders that might occur if Musk exercised his stock options. The proxy adviser, which provides institutional investors with voting recommendations at annual shareholder meetings, also expressed concern that Musk might be distracted from his give attention to Tesla by commitments at his other ventures, including social media company X.
Tesla fired back on the proxy advisor in a Thursday letter titled “What Glass Lewis Got Wrong About Tesla.” In response to Glass Lewis’ concerns in regards to the exploding value of Musk’s stock, his focus and commitment to Tesla, and the “excessive” level of his compensation, the electrical automobile maker repeatedly points to the greater than $735 billion in value Tesla has gained in lower than six years.
In addition, the corporate wrote that it was right to pay Musk his billion-dollar salary.
“Tesla believes it should honor its commitment to Elon, just as Elon has honored that commitment to Tesla. A deal is a deal. That’s fair and ethical,” the letter said.
Musk’s compensation package was originally approved by shareholders in 2018, but was rejected by a Delaware judge who cited concerns in regards to the independence of Tesla’s board, amongst other things, in approving the compensation plan. In April, the corporate said it could hold one other vote on Musk’s salary package on the annual meeting in June. The company can be asking shareholders to approve moving the corporate’s headquarters from Delaware to Texas. This proposal got here after Musk’s compensation package was invalidated by a judge in January.
Although corporate proposals often pass overwhelmingly on the annual shareholder meeting, some major investors oppose them. On Wednesday, the California Public Employee Retirement System (CalPERS) said it could vote against the pay package. Last week, a gaggle of investors, including New York City pension funds, really useful that shareholders not support the proposal. Assets reported.
Still, Tesla has fought hard to persuade shareholders to approve the pay proposal at its annual meeting in June, including through ads, a web site and a video of CEO Robyn Denholm. Musk himself is offering a dozen shareholders who vote for his pay package a tour of the corporate’s Texas production lines for the Cybertruck and Model Y.
Tesla didn’t immediately reply to AssetsPlease leave a comment.
In its letter filed on Thursday, the electrical automobile maker stressed that approving Musk’s salary was appropriate given the billions of dollars in value he had enabled the corporate to extend.
“Elon was fully prepared to earn nothing if he disappointed shareholders,” the letter said. “But he did not disappoint shareholders. He delivered. In fact, he delivered more value than expected in half the time.”
