Proxy-advisory firm Glass Lewis advises Tesla shareholders to vote against Elon Musk’s multibillion-dollar pay package

Proxy-advisory firm Glass Lewis has advised Tesla shareholders to vote against Elon Musk’s multibillion-dollar pay package at the company’s meeting next month. In a 71-page report, Glass Lewis expressed concerns that Musk’s proposed compensation, valued at $46 billion, could dilute existing holdings in Tesla and concentrate his ownership, making him the largest shareholder by a significant margin.

The vote, scheduled for June 13, will also include proposals such as moving the company’s incorporation to Texas, which Glass Lewis also advised against. Shareholders will consider these recommendations as proxy advisers’ opinions often influence their votes.

Musk’s compensation package was initially approved by Tesla shareholders in 2018 but was later struck down by a Delaware court in January due to concerns about the approval process. The court cited Musk’s close ties with board members as a reason for rescinding the package, which was valued at up to $55.8 billion.

Despite the setback, Tesla reintroduced the pay package last month, which includes a 10-year grant of stock options. The company has been advocating for shareholder support, highlighting Musk’s role in the company’s significant growth in market value from $50 billion to $570 billion since 2018.

However, Glass Lewis remains critical of the pay package, citing concerns about its size and dilutive effect on existing shares. The firm had advised against voting for the package in 2018 and maintains most of its concerns in the current version.

For the pay package to be approved, a majority of shares voted must support it, excluding Musk’s 13% stake and a smaller stake owned by his brother. The outcome of the vote will have significant implications for Tesla and Musk, who does not accept a salary from the company and has most of his assets tied up in Tesla shares.

The controversy surrounding Musk’s pay package reflects broader challenges facing Tesla as it navigates slowing vehicle sales and declining share prices. Shareholders will have to weigh the company’s performance against concerns about executive compensation when casting their votes at the upcoming meeting.