Proxy firm advised Tesla shareholders to reject CEO Elon Musk’s proposed $56 billion pay package, citing its excessive size, dilutive impact.
On Saturday, Glass Lewis, a proxy firm, urged Tesla (TSLA.O) shareholders to reject a proposed $56 billion pay package for Chief Executive Officer Elon Musk.
Proxy Firm Against $56 Billion Pay Package
If approved, this would be the highest pay package ever offered to a CEO in the United States of America. The study noted several factors, including the “excessive size” of the pay contract, the dilutive effect upon exercise and the concentration of ownership.
The report also referenced Musk’s expansion of a “slate of extraordinarily time-consuming projects” with his high-profile purchase of Twitter, now known as X.
Tesla’s board of directors, often criticized for its close relationship with the billionaire, suggested the compensation plan. The compensation package does not include a salary or a cash incentive but rather establishes awards based on Tesla’s market value, which reaches as high as $650 billion over the course of ten years beginning in 2018.
LSEG’s data indicates that the corporation’s current valuation is approximately $571.6 billion.Judge Kathaleen McCormick of the Delaware Court of Chancery declared the initial compensation package null and unlawful in January.
From that point on, Musk made an effort to relocate Tesla’s state of incorporation from Delaware to Texas. Additionally, Glass Lewis voiced their disapproval of the proposed relocation to Texas, stating that it would provide stockholders with “uncertain benefits and additional risk.
“Tesla has extended an invitation to its shareholders to reaffirm their consent to the remuneration scheme.
Robyn Denholm, the chairwoman of Tesla’s board of directors stated in an interview with the Financial Times earlier this month that Elon Musk is deserving of the compensation package since the business has achieved highly ambitious aims for both its sales and its stock price. Tesla appointed Musk as its CEO in 2008.
A new tab on the Vote Tesla online campaign website reveals that Musk has significantly improved the company’s performance over the past few years, transforming it from a $2.2 billion deficit in 2018 to a current profit of $15 billion. Additionally, the company has manufactured seven times more vehicles.
Furthermore, the proxy counsel recommended that shareholders vote against the reelection of board member Kimbal Musk, who is the billionaire’s brother. Conversely, the proxy counsel recommended the reelection of James Murdoch, the former CEO of 21st Century Fox.