Tesla investors advised to vote against Elon Musk’s ‘excessive’ $56bn CEO pay
Tesla investors advised to vote against Elon Musk’s ‘excessive’ $56bn CEO pay
Advisory Firms Recommend Against Elon Musk's $56bn Tesla Pay Package
Excessive Compensation Concerns
ISS and Glass Lewis, prominent proxy advisory firms, have advised Tesla shareholders to vote against CEO Elon Musk's $56 billion pay package, criticizing it as excessively large despite the company's success.
Impact on Leadership and Company Focus
The advisory firms and some investors express concerns that Musk's attention may be divided among his various ventures, potentially affecting his focus on Tesla and its shareholders' interests.
Recommendations on Other Votes
While ISS opposed the reappointment of director James Murdoch citing risk oversight issues, it supported other board decisions, including relocating Tesla's incorporation from Delaware to Texas.
Market Reaction and Company Defense
Tesla's stock showed a slight decline following these recommendations. The company defended the compensation package, emphasizing Musk's significant role in increasing shareholder value.
Why did ISS recommend a vote against Tesla director James Murdoch?
ISS recommended a vote against Tesla director James Murdoch due to concerns about the risk oversight function of the board.
What specific reasons did ISS cite for recommending shareholders vote against Elon Musk's $56bn pay package?
ISS, or Institutional Shareholder Services, provided several reasons for recommending that Tesla shareholders vote against Elon Musk's $56 billion pay package.
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Excessive Award Value: ISS stated that the total award value remains excessive even given Tesla's success. They acknowledged that the structure of the grant's performance hurdles arguably contributed to the company's significant financial growth during the performance period. However, they still deemed the overall award value as excessive.
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Failure to Achieve Board's Objectives: ISS pointed out that the grant failed to achieve the board's other original objectives. These objectives included focusing CEO Musk on the interests of Tesla shareholders, as opposed to other business endeavors, and aligning his financial interests more closely with those of Tesla stockholders.
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Lack of Clarity on Future Pay Plans: Another concern expressed by ISS was the lack of clarity on the board's plan for Musk's future pay.
In addition to the issues with Musk's pay package, ISS also recommended a vote against director and audit committee member James Murdoch, given concerns about the risk oversight function of the board.