FX168 Financial News (North America) news agency consulting firm Glass Lewis said on Saturday (May 25) that Tesla shareholders have been urged to reject CEO Elon Musk's $56 billion compensation plan. Once approved, the plan will become the highest compensation plan for US corporate CEOs.
The report cites a number of reasons, including “excessive amounts” of pay agreements, diluting effects on exercise, and concentration of ownership. The report also mentioned Musk's “a series of extremely time-consuming projects,” which continued to expand with his high-profile acquisition of Twitter (now known as X).
The compensation package was proposed by Tesla's board of directors, which has been criticized several times for its close relationship with the billionaire. The compensation plan has no wages or cash bonuses; instead, rewards are set based on Tesla's market capitalization rising to $650 billion within 10 years after 2018. The company's current market capitalization is around $571.6 billion, according to the London Stock Exchange.
In January of this year, Delaware Court of Equity Judge Kathaleen McCormick declared the original compensation plan invalid. Musk then sought to move Tesla's registration from Delaware to Texas.
Glass Lewis also criticized the proposed move to Texas, saying it would bring “uncertain benefits and additional risks” to shareholders.
Tesla has urged shareholders to reconfirm their approval of the compensation.
In an interview this month, Tesla Board Chairman Robyn Denholm told the Financial Times that Musk is worthy of this pay because the company has achieved ambitious revenue and share price targets.
Musk became Tesla's CEO in 2008. According to the online campaign website Vote Tesla, in recent years, he helped the company improve its performance, making the company profit of $15 billion from losses of $2.2 billion in 2018, and increasing automobile production sevenfold.
The acting advisor also recommended that shareholders vote against the re-election of billionaire brother Kimbal Musk (Kimbal Musk) as a board member, while recommending that former 21st Century Fox CEO James Murdoch (James Murdoch) be re-elected.