Two influential advisory firms have urged shareholders to vote against Elon Musk’s contentious $51 billion pay package and raised concerns about the CEO’s numerous side projects.
On Friday, Institutional Shareholder Services called the package “excessive” and noted that shareholder concerns “have not been sufficiently mitigated” since the package was first approved in 2018.
While recognizing Tesla’s growth and profitability, ISS said Musk’s pay package — first approved in 2018 and thrown out by a judge in January — “was considered outsized from the start” and has “failed to accomplish certain of the board’s stated objectives,” including focusing Musk “more closely on the Tesla organization, as opposed to his other businesses.”
That warning came a few days after Glass Lewis, another prominent advisory firm, published a 71-page report that criticized the size of the compensation plan and warned about Musk’s “slate of extraordinarily time-consuming projects” that are unrelated to Tesla, such as X, the company formerly known as Twitter.
Musk pushed back against the Glass Lewis report on Wednesday, telling shareholders in a letter that the firm “omits key considerations, uses faulty logic, and relies on speculation and hypotheticals.” The letter urges shareholders to approve the pay package as well as the board’s proposal to formally move Tesla’s headquarters to Texas from Delaware.
The move to Texas, where Musk also operates SpaceX, was proposed shortly after a Delaware Chancery Court judge sided with Tesla shareholders who challenged the legality of the 2018 pay package.
Those shareholders also argued that the directors on Tesla’s board were not truly independent and were too close to Musk to protect shareholders’ interests.
The board is putting the same 2018 package up for a revote at Tesla’s annual shareholder meeting on June 13.
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