Proxy Advisory Firm Advises Against Musk Tesla Pay Deal

A proxy advisory firm has advised investors to vote against re-approval of a record-breaking pay package for Tesla chief executive Elon Musk at a meeting next month.

Glass Lewis in a 71-page analysis said the package, recently valued at around $46 billion (£36bn), could dilute other investors’ holdings and concentrate Musk’s ownership in Tesla, making him the largest shareholder “by a healthy margin”.

The firm also cited the package’s “excessive size” and Musk’s “slate of extraordinarily time-consuming projects”, such as his acquisition of Twitter, now X.

The package, once valued at as much as $55.8bn, has diminished in value due to recent declines in Tesla’s stock price.

Shareholder vote

Shareholders approved the deal in 2018, but in January a Delaware chancery judge struck it down citing Musk’s “extensive ties” with board members and other concerns with the approval process.

Musk moved to re-incorporate the company in Texas, a measure that is one of the other propositions to be put to a shareholder vote at the 13 June meeting.

Glass Lewis also advised against the re-incorporation, saying it offers “uncertain benefits and additional risk” to shareholders.

Tesla last month re-proposed the pay package, which consists of a 10-year grant of stock options, and has urged shareholders to accept it.

Tesla’s market value has grown from around $50bn in 2018 to about $570bn today, and supporters of the deal say Musk deserves to be rewarded for reaching performance targets.

‘Excessive size’

Glass Lewis advised against accepting the package in 2018 and said most of its concerns remain.

“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 firm said in its analysis. “The company’s provided rationale does little to combat these concerns given their proportionate magnitude.”

To be approved the majority of shares must support it, exclusing Musk’s roughly 13 percent stake and a smaller share held by his brother.