Tesla Shareholders Advised by Proxy Adviser to Reject Musk's Pay Package
Tesla Shareholders Advised by Proxy Adviser to Reject Musk's Pay Package
Tesla Shareholders Urged to Reject Musk's Pay Plan
Proxy Advisers' Recommendations
Proxy advisers ISS and Glass Lewis recommend Tesla shareholders vote against Elon Musk's $56 billion compensation plan, citing its failure to meet objectives and lack of transparency.
Legal Challenges and Board Actions
A Delaware judge invalidated Musk's pay package for lack of transparency. Tesla's board is pushing for a re-vote to bolster a potential legal appeal.
Shareholder Vote and Board Response
Despite previous support for the package, a new vote poses reputational risks for Tesla's board. Tesla is actively campaigning for shareholder approval.
Reincorporation Proposal
Tesla proposes moving its incorporation from Delaware to Texas, which ISS views with caution due to potential risks in Texas business court practices.
How did Tesla's board respond to the criticism from proxy advisers like ISS and Glass Lewis & Co. regarding Musk's compensation package?
Tesla's board responded to the criticism from proxy advisers like ISS and Glass Lewis & Co. by urging shareholders to vote in favor of Musk's $56 billion compensation plan. The board argued that it would be unfair for Musk not to receive the award and that the pay package was initially approved by shareholders in 2018. Tesla's board has also mobilized to gain shareholder support for the measure, with board Chair Robyn Denholm contacting large institutional investors. Tesla has published a number of ads on X, formerly Twitter, and hired a strategic adviser to set up a "Vote Tesla" website. The website argues that reinstating the pay package supports shareholders' rights.
What was the outcome of the initial shareholder vote on Musk's pay package in 2018, and how did shareholders respond?
In 2018, Tesla shareholders initially approved Elon Musk's $56 billion pay package. However, the approval was not without controversy as there was dissent even then, with 73% of votes in favor compared to a typical 95% approval level for corporate CEO pay. Some shareholders and proxy advisory firms criticized the package as excessive. Despite the approval, the pay package faced legal challenges, and in January 2024, a Delaware judge struck down the compensation plan. Tesla's board is now asking shareholders to vote on the package again at the June 13 annual meeting, with some investors expressing their support while others urge fellow shareholders to reject the deal3.