Apu Gomes/Getty Images News
Influential proxy advisory firm Glass Lewis has urged Tesla (NASDAQ:TSLA) shareholders to reject a proposed $56B compensation package for top boss Elon Musk that was voided by a U.S. court earlier this year.
The electric vehicle giant is set to hold its annual shareholder meeting on June 13, where participants will get a chance to vote on the compensation package comprised of stock option awards.
Glass Lewis made its recommendation in a report published on Saturday, which was viewed by Seeking Alpha. The advisory firm cited the “excessive” dilutive impact of the package.
Musk’s $56B pay package was voided by Delaware Judge Kathaleen McCormick in late January after a shareholder lawsuit claimed that the package was unduly approved.
“When the 2018 CEO Performance Award was originally presented for shareholder approval, Glass Lewis raised a number of concerns about the grant, including the quantum of pay and the dilutive impact on disinterested shareholders. Some concerns such as the lack of repricing prohibition were addressed in clarifications provided through subsequent Company filings,” Glass Lewis said.
“We find that the most substantive of our prior concerns remain intact. The excessive size of the award, both on a pure dollar basis and in terms of the dilutive effect upon exercise, remains very much top of mind … The Company’s provided rationale does little to combat these concerns given their proportionate magnitude,” the advisory firm added.
Musk appears to have the support of the Tesla (TSLA) board on the compensation matter.
“Elon has not been paid for any of his work for Tesla (TSLA) for the past six years that has helped to generate significant growth and stockholder value. That strikes us – and the many stockholders from whom we already have heard – as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it,” Robyn Denholm, chairperson of the board, said in the company’s proxy statement in April.
Tesla (TSLA) shareholders at the annual meeting in June will also be voting on a proposal to approve the redomestication of the company to Texas from Delaware.
Glass Lewis has recommended against the Texas move, saying that it was not in shareholders’ interest and that it provided uncertain benefits and added risk.
