Proxy advisory firm Glass Lewis has recommended that Tesla shareholders reject a $56 billion pay package for CEO Elon Musk. If approved, this would be the largest CEO pay package in corporate America.
Glass Lewis cited several reasons for their recommendation, including the “excessive size” of the deal, its potential to dilute shareholder value, and Musk’s involvement in many demanding projects, including his recent purchase of Twitter, now known as X.
Tesla’s board of directors proposed the pay package, which has no salary or cash bonus. Instead, it offers rewards based on Tesla’s market value increasing to $650 billion over the next 10 years from 2018. Currently, Tesla is valued at about $571.6 billion.
In January, Judge Kathaleen McCormick of Delaware’s Court of Chancery invalidated the original pay package. Musk has since suggested moving Tesla’s state of incorporation from Delaware to Texas. Glass Lewis criticized this potential move, saying it offers “uncertain benefits and additional risk” to shareholders.
Tesla has asked shareholders to reaffirm their support for Musk’s compensation. Tesla’s board chair, Robyn Denholm, defended the pay package, stating that Musk deserves it because the company has met ambitious revenue and stock price targets.
Musk became Tesla’s CEO in 2008. Under his leadership, the company has turned a $15 billion profit from a $2.2 billion loss in 2018 and increased vehicle production sevenfold, according to the Vote Tesla campaign website.
Glass Lewis also recommended shareholders vote against the reelection of board member Kimbal Musk, Elon Musk’s brother, while supporting the reelection of former 21st Century Fox CEO James Murdoch.
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