NEWSLETTER
Apu Gomes/Getty Images News
Influential proxy advisory firm Glass Lewis has urged Tesla (NASDAQ:TSLA) to reject a proposed $56 billion compensation package for CEO Elon Musk that was overturned by a US court earlier this year.
The electric vehicle giant is prepared to will hold its annual shareholders meeting on June 13thwhere participants will have the opportunity to vote on the compensation package comprised of stock option awards.
Glass Lewis made its recommendation in a report published Saturday, which was seen by Seeking Alpha. The advisory firm cited the “excessive” dilutive impact of the package.
Musk's $56 billion pay package was struck down by Delaware Judge Kathaleen McCormick in late January after a shareholder lawsuit claimed the package had been improperly approved.
“When the 2018 CEO Performance Award was originally submitted for shareholder approval, Glass Lewis raised a number of concerns about the grant, including the amount of payment and the dilutive impact on disinterested shareholders. Some concerns, such as the lack prohibition of revaluation, were addressed in clarifications provided through subsequent Company filings,” Glass Lewis said.
“We consider that the most substantial of our previous concerns remains intact. The excessive size of the award, both in pure dollar terms and in terms of the dilutive effect when exercised, remains most important… The justification provided by the Company makes little to combat these concerns given their proportional magnitude,” the advisory firm added.
Musk appears to have the support of the Tesla (TSLA) board of directors on compensation.
“Elon has not been paid for any of his work for Tesla (TSLA) over the past six years, which has helped generate significant growth and shareholder value. So it seems to us – and to the many shareholders of whom he already – as fundamentally unfair, and inconsistent with the will of the shareholders who voted in favor,” Robyn Denholm, chairman of the board, said in the company's proxy statement in April.
Tesla (TSLA) shareholders at the June annual meeting will also vote on a proposal to approve the company's redomestication to Texas from Delaware.
Glass Lewis has recommended against the Texas move, saying it was not in the interests of shareholders and provided uncertain benefits and added risks.
