Two influential advisory firms have recommended that shareholders vote against Elon Musk’s $51 billion pay package and have expressed concerns about the CEO’s various side projects. Institutional Shareholder Services (ISS) called the package “excessive” and stated that shareholder concerns have not been adequately addressed since the package was first approved in 2018. ISS acknowledged Tesla’s growth and profitability but criticized Musk’s pay package as being overly large from the beginning and failing to achieve certain objectives set by the board.
Glass Lewis, another well-known advisory firm, published a report criticizing the size of Musk’s compensation plan and raised alarms about his numerous unrelated projects, such as X, previously known as Twitter. Musk responded to the Glass Lewis report by accusing the firm of omitting key considerations, using faulty logic, and relying on speculation and hypotheticals. Musk urged shareholders to approve the pay package and the board’s proposal to move Tesla’s headquarters to Texas, where he also operates SpaceX.
After a Delaware Chancery Court judge invalidated the 2018 pay package in January, the proposed move of Tesla’s headquarters to Texas was introduced as Musk faced criticism for having directors on Tesla’s board who were not independent and were too close to him to protect shareholders’ interests. The board plans to have shareholders revote on the 2018 package at Tesla’s annual shareholder meeting on June 13, despite the previous concerns raised by ISS and Glass Lewis.
The advisory firms’ critiques of Musk’s pay package and side projects have added to existing shareholder concerns about corporate governance and transparency at Tesla. Musk’s response to the criticism highlights his desire for shareholders to support the pay package and headquarters relocation. The ongoing challenges faced by Tesla’s board highlight the need for greater independence and oversight to protect shareholders’ interests and ensure the company’s long-term sustainability.
While Tesla has experienced significant growth under Musk’s leadership, concerns remain about his focus on side projects and the potential impact on the company’s core business. The shareholder vote on the pay package and headquarters move will be a crucial moment for determining the direction of Tesla and the level of support Musk has from investors. As Tesla continues to navigate these challenges, the decisions made at the upcoming annual shareholder meeting will be pivotal in shaping the company’s future and its relationship with shareholders and stakeholders.
