Tesla shareholders urged to reject reinstating Elon Musk’s $56B pay package

Tesla shareholders are expected to vote on reinstatement this week CEO Elon Musk A $56 billion compensation package that was invalidated by a Delaware judge earlier this year is being urged to be set aside by proxy advisory firms.

Glass Lewis on Saturday Tesla Shareholders The company rejected the staggering package, citing its “excessive size,” the impact of Musk’s stock option exercise and the concentration of ownership in the company.

The report also noted that Musk’s “set of extremely time-consuming projects” has increased since he acquired Twitter Inc. (now known as X), where he serves as chief technology officer and chairman. Musk is also CEO of SpaceX and artificial intelligence company xAI, and is the founder of Neuralink and The Boring Company.

Tesla’s board proposed reinstating a compensation package that would have no salary or cash bonus but would provide compensation in the form of stock options that would be granted if Tesla’s market capitalization grows by up to $650 billion over the 10 years after 2018. The company’s current market capitalization is about $571.6 billion, according to LSEG data.

Tesla asks shareholders to reinstate Elon Musk’s salary and move to Texas

Tesla is urging shareholders to vote to reinstate Elon Musk’s $56 billion compensation package. (Photo by Apu Gomez/Getty Images/Getty Images)

Mask original The salary package was voided. In January, Judge Katherine McCormick of the Delaware Court of Chancery ruled in favor of a shareholder lawsuit seeking to void the compensation package, calling it by far the largest ever offered to a CEO of a public company and excessively excessive.

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TSLA Tesla Inc. 179.24 +5.50 +3.17%

McCormick also criticized Tesla’s board of directors for failing to adequately disclose to shareholders the relative ease with which Tesla would meet the benchmarks tied to each tranche of the compensation plan, given Musk’s close relationship with the directors who approved the compensation package, and the company’s growth at the time.

Tesla to Texas? Elon Musk announces key shareholder vote

Elon Musk

Musk is moving SpaceX’s headquarters from Delaware to Texas and is considering doing the same for Tesla. (Photo by Michael M. Santiago/Getty Images/Getty Images)

Tesla has asked shareholders to reaffirm their approval of Musk’s compensation plan. Financial Times interview Earlier this month, Tesla’s board chairman, Robin Denholm, said Musk deserved to be paid because the company had met ambitious targets for sales and stock price.

Following a January court ruling that invalidated his compensation package, Musk moved to make the changes. Tesla’s state of incorporation From Delaware to Texas – shareholders are also being asked to vote on this proposal.

Elon Musk’s $56 billion compensation package is struck down by judge

Tesla EV Parking

Tesla reported its first quarterly sales decline in nearly four years in the first quarter of this year. (Photo by Justin Sullivan/Getty Images/Getty Images)

Proxy advisors recommended shareholders oppose changing Tesla’s state of incorporation, saying the change would create “uncertain benefits and additional risks” for shareholders.

Musk has been Tesla’s CEO since 2008 and has led the electric vehicle maker’s rise to prominence. Most Valuable Automobile Manufacturers In terms of market capitalization, Tesla is No. 2. He led the company from a $2.2 billion loss in 2018 to a $15 billion profit and increased vehicle production sevenfold, according to the Vote Tesla campaign website.

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The company has faced headwinds amid waning consumer interest in EVs, and Tesla reported its first sales decline in nearly four years in the first quarter.

Reuters contributed to this report.