Tesla shareholders advised to reject Musk's $56 billion pay
Should Tesla Reject Musk's $56B Pay Deal?
Proxy advisory firm Glass Lewis has recommended that Tesla shareholders reject a $56 billion compensation package for CEO Elon Musk, citing its excessive size and potential dilutive effects. The proposal, linked to ambitious market value targets, has been criticized amidst Musk's involvement in other demanding projects like his acquisition of Twitter. Additionally, Glass Lewis opposed relocating Tesla's incorporation from Delaware to Texas, highlighting uncertain benefits and risks. Tesla's board, however, supports the package, attributing it to Musk's significant contributions to the company's profitability and production growth.
What are the conditions under which Musk's pay package would reward him, according to the terms set by Tesla's board of directors?
According to the terms set by Tesla's board of directors, Elon Musk's pay package would reward him based on Tesla's market value rising to as much as $650 billion over the 10 years from 2018. The package has no salary or cash bonus and sets rewards based on the company's performance.
What specific reasons did Glass Lewis cite for advising Tesla shareholders to reject Elon Musk's $56 billion pay package?
Glass Lewis, a proxy advisory firm, advised Tesla shareholders to reject Elon Musk's proposed $56 billion pay package for several reasons. Firstly, they highlighted the "excessive size" of the pay deal, which they found to be disproportionately large. Additionally, they pointed out the dilutive effect the package could have upon exercise, implying that it could undermine the value of existing shares. Another concern was the increased concentration of ownership that would result from the package, potentially giving Musk too much control. Furthermore, Glass Lewis raised concerns about Musk's ability to manage his responsibilities effectively given his involvement in "extraordinarily time-consuming projects," including his acquisition of Twitter, now known as X. These factors combined led Glass Lewis to question the overall benefit and risk of the proposed compensation to the shareholders.