On Saturday, proxy consulting company Glass Lewis said that it had encouraged Tesla shareholders to oppose Chief Executive Officer Elon Musk's $56 billion compensation package. If approved, this would be the biggest compensation package for a CEO in corporate America.
The report listed factors such as the concentration of ownership, the dilutive effect upon exercise, and the "excessive size" of the compensation package as explanations. Along with his high-profile acquisition of Twitter (now called X), it also referenced Musk's "slate of extraordinarily time-consuming projects" that have grown.
The board of directors of Tesla, which has been under fire for its associations with the billionaire on multiple occasions, proposed the compensation plan. Earnings are contingent upon Tesla's market value reaching $650 billion in the ten years beginning in 2018. Salary and cash bonuses are not part of the program. According to LSEG data, the company's current valuation is approximately $571.6 billion.
The initial compensation plan was nullified in January by Judge Kathaleen McCormick of the Court of Chancery in Delaware. Musk subsequently attempted to have Tesla's incorporation transferred from Delaware to Texas.
Additionally, Glass Lewis voiced concerns that stockholders would be exposed to "uncertain benefits and additional risk" due to the planned relocation to Texas. Tesla has asked its shareholders to confirm that they are okay with the pay.
This month, Robyn Denholm, head of Tesla's board of directors, spoke with the Financial Times and said that Musk deserves the compensation package because the business achieved its aggressive revenue and stock price goals.
In 2008, Musk was named CEO of Tesla. According to the online campaign website Vote Tesla, he has been instrumental in improving performance in recent years, leading the company to a $15 billion profit from a $2.2 billion loss in 2018. Additionally, the production of automobiles has increased sevenfold.
Kimbal Musk is the billionaire's brother and a board member; the proxy advisor advised shareholders to vote against his renewal. On the other hand, former 21st Century Fox CEO James Murdoch was recommended for reelection.