Proxy Advisory Firm Glass Lewis Urges Tesla Shareholders to Reject Elon Musk’s $56 Billion Pay Package

Glass Lewis Urges Tesla Shareholders to Reject Elon Musk’s $56 Billion Pay Package

Proxy advisory firm Glass Lewis has issued a strong recommendation for Tesla shareholders to reject CEO Elon Musk’s record-breaking $56 billion pay package. The report criticized the proposed compensation plan for its excessive size, potential dilution of shareholder ownership, and the concentration of power it would grant Musk.

In addition to concerns about the size and structure of the pay package, Glass Lewis raised alarm over Musk’s divided focus on multiple time-consuming projects outside of Tesla, including the recent acquisition of X (formerly known as Twitter). The report highlighted the potential impact of Musk’s external ventures on his ability to effectively lead Tesla.

The controversial pay package, proposed by Tesla’s board of directors, offers Musk stock options if the company’s market value reaches $650 billion within the next decade. Currently, Tesla’s market valuation stands at approximately $571.6 billion, according to LSEG data.

Critics of the compensation plan, including renowned short seller Jim Chanos, have accused Musk of attempting to consolidate power at Tesla and jeopardizing the company’s progress. Chanos specifically called out Musk’s push to double his voting rights, a move that was rejected by a Delaware judge earlier this year.

The court’s decision to void the original pay package prompted Musk to consider relocating Tesla’s incorporation from Delaware to Texas. However, Glass Lewis expressed reservations about the proposed move, citing potential risks and uncertain benefits for shareholders.

Tesla’s board chair, Robyn Denholm, defended Musk’s compensation package in a recent interview with the Financial Times, pointing to the company’s achievement of revenue and stock price targets as justification for the award. Despite Glass Lewis’ recommendation to reject the pay package, Tesla is urging shareholders to support the plan.

The upcoming June 13 annual meeting will see Tesla shareholders voting on Musk’s pay package, as well as the company’s proposed relocation to Texas and the re-election of board member Kimbal Musk. The outcome of these key votes could have significant implications for Tesla’s future direction and Musk’s leadership.

While the shareholder vote is non-binding, a rejection of the pay package could signal investor dissatisfaction with Musk’s leadership and impact Tesla’s image. Tesla has launched a campaign to secure shareholder approval, including personal engagement with institutional investors and outreach to retail shareholders through a dedicated website.

As the debate over Musk’s compensation intensifies, Tesla shareholders face a critical decision that could shape the company’s trajectory in the years to come. Stay tuned for updates on the outcome of the upcoming shareholder vote and its implications for Tesla and Elon Musk.