Tesla shareholders advised to reject Musk’s $56 billion pay

Proxy advisory firm Glass Lewis said Saturday it has urged Tesla shareholders to reject a $56 billion compensation package for CEO Elon Musk that, if passed, would be the largest ever for a CEO of a U.S. company.

The report cited the “excessive size” of compensation agreements, dilutive effects upon exercise and concentrated ownership as reasons for the decision, as well as Musk’s “extremely time-consuming series of projects” that expanded with his high-profile acquisition of Twitter, now known as X.

The compensation package was proposed by Tesla’s board of directors, which has repeatedly been criticized for its close ties to billionaires. The package includes no salary or cash bonuses and is based on Tesla’s market capitalization rising to up to $650 billion over the 10 years from 2018. The company’s current market capitalization is about $571.6 billion, according to LSEG data.

In January, Delaware Chancery Court Judge Kathleen McCormick struck down the original compensation package, after Musk sought to move Tesla’s state of incorporation from Delaware to Texas.

The compensation package was proposed by Tesla’s board of directors, which has repeatedly come under fire for its close ties to Elon Musk. Reuters

Glass Lewis also criticized the proposed move to Texas, saying it would bring “uncertain benefits and additional risks” to shareholders.

Tesla has asked shareholders to reaffirm their approval of the compensation.

Tesla’s board chairman, Robin Denholm, told the Financial Times in an interview this month that Musk deserved the compensation package because the company had met ambitious targets for sales and stock price.

Tesla logo
In recent years, Musk has led the company from a $2.2 billion loss in 2018 to a $15 billion profit. AFP via Getty Images

Musk became Tesla’s CEO in 2008 and has helped turn around the company’s performance in recent years, boosting the company’s profits from a $2.2 billion loss in 2018 to $15 billion and increasing vehicle production sevenfold, according to the online campaign site Vote Tesla.

The proxy advisor also recommended shareholders vote against the re-election of billionaire brother Kimbal Musk, a board member, but recommended the re-election of former 21st Century Fox CEO James Murdoch.