A top proxy advisory firm has urged Tesla shareholders to vote against Elon Musk’s $56 billion pay deal and a proposal to reincorporate the EV maker in Texas.
Glass Lewis said in a report that the compensation package was of “excessive size” and “dilutive” while also raising concerns over Musk’s numerous other projects — particularly the social media platform X.
“Mr. Musk’s slate of extraordinarily time-consuming projects unrelated to the Company was well-documented before the 2018 grant, and only expanded with his high-profile purchase of the company now known as X,” Glass Lewis said in the report, per Bloomberg.
The Tesla CEO also runs SpaceX, Neuralink, and the Boring Company.
Glass Lewis added that the proposed move to Texas offered shareholders “uncertain benefits and additional risk,” the Financial Times reported.
Proxy advisor firms guide shareholders on how to vote at shareholder meetings, helping them “make educated decisions that benefit the company as well as their own investments,” Glass Lewis says on its website.
A report published on the Harvard Law School Forum on Corporate Governance said that proxy advisory firms can have “significant influence” over institutional investors voting decisions as well as the governance choices of publicly traded companies.
The Glass Lewis report comes ahead of Tesla’s annual meeting on June 13, when investors will vote on the proposed package of share options, which was initially outlined in 2018.
Musk has previously threatened to develop future products elsewhere if his bid to gain more control of Tesla by increasing his stake is blocked.
“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned,” he wrote on X in January. “Unless that is the case, I would prefer to build products outside of Tesla.”
Tesla’s board has been attempting to persuade investors to support the controversial package since it was struck down by a Delaware judge in January over concerns about its size and the board’s independence.
In the ruling, Court of Chancery Judge Kathleen St. J. McCormick said, “The process leading to the approval of Musk’s compensation plan was deeply flawed,” adding that “Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf.”
The SpaceX CEO was quick to express his view on the ruling on X, writing, “Never incorporate your company in the state of Delaware.”
In 2018, 73% of investors approved Musk’s pay proposal, per the FT.
If Tesla’s board can now prove investors still back the deal, it may help an appeal case against the decision to void it.
Losing the vote would be a major blow to the board and could call Musk’s leadership into question.
Tesla did not immediately respond to a request for comment from Business Insider, which was made outside regular working hours.
Source link
