- Proxy firms Glass Lewis and ISS have both advised shareholders to vote against Tesla CEO Elon Musk‘s proposed $1 trillion pay package.
- Glass Lewis cited worries about potential share dilution and terms of the pay arrangement, describing them as cause for significant concern.
- Tesla responded by criticizing the proxy advisors, stating their recommendations have regularly opposed shareholder interests since 2018.
- ISS indicated the pay package could lock in extremely high compensation for Musk over the next decade and limit future board flexibility.
- The vote on the compensation proposal is scheduled for Tesla‘s annual shareholders meeting on November 6.
Proxy advisory firm Glass Lewis has recommended that Tesla shareholders oppose CEO Elon Musk’s proposed $1 trillion compensation package at the company’s upcoming annual meeting on November 6. This move aligns Glass Lewis with Institutional Shareholder Services (ISS), which also called for shareholders to reject the compensation plan.
In its recommendation, Glass Lewis cited concerns that approving the pay package would result in potential share dilution for current investors and pointed out that other aspects of the proposal are problematic. According to reporting from TheFly, the advisory firm said the terms “warrant significant concern.”
Tesla responded to the recommendations with a statement on X, criticizing both ISS and Glass Lewis for what it called “misguided recommendations” that have opposed several of the company’s proposals since the 2018 CEO Performance Award. The company stated: “Glass Lewis has followed ISS and issued another misguided recommendation that again disregards the fundamental purpose of public companies and who they serve – the shareholders. These firms do not own Tesla – you do.”
The company also said that both federal and state officials are reviewing the practices of proxy advisors, including new laws that require recommendations to be based on the financial interests of shareholders. Tesla added: “ISS’s and Glass Lewis’s recommendations attempt to override the mandate our shareholders delivered to Elon and ignore the staggering financial results delivered under Elon’s leadership, elevating their rigid policies over shareholder value.”
ISS, in its earlier guidance cited by Reuters, noted the pay package was designed to secure Musk’s continued leadership due to his “track record and vision,” but warned it would “lock in extraordinarily high pay opportunities over the next ten years.” The report stated that ISS considers the package’s “astronomical” size, the structure allowing payouts even if only some goals are achieved, and associated dilution of shareholder equity are all significant issues.
Shares of Tesla rose 1% in early Monday trading and have more than doubled in the past year.
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