Would You like a feature Interview?
All Interviews are 100% FREE of Charge
Influential proxy advisory firm Institutional Shareholder Services (ISS) has recommended that Tesla shareholders vote against Elon Musk’s proposed $56 billion compensation package.
ISS said in its report that the Tesla CEO’s stock options trading, first outlined in 2018, was “too large from the start.” Bloomberg report.
“Some investors may find persuasive the board’s argument that it is unfair that Mr. Musk should not receive an award,” the report continued.
“However, the concerns raised in 2018 and throughout the period have not been adequately alleviated, particularly given that the Board has effectively offered shareholders an ‘all or nothing’ choice in this vote,” it added.
Earlier, another major proxy advisory firm, Glass Lewis, also called on Tesla investors to vote against the deal.
Glass Lewis said the deal was “oversized” and “dilutive” and raised concerns about many of Musk’s “time-consuming projects,” particularly social media platform X, formerly known as Twitter.
“Musk’s extensive, time-consuming list of projects unrelated to the company were well-documented prior to the 2018 grant and were further expanded by the company’s high-profile acquisition of what is now known as X,” Glass Lewis said in the report.
Tesla responded swiftly to the report, Letter to Shareholders The article was titled “What Glass Lewis Got Wrong About Tesla.”
The letter, released Wednesday, said the proxy advisors relied on “speculation and assumptions,” used “faulty logic” and omitted “important considerations.”
ISS expressed “cautious support” for the proposal to reincorporate Tesla in Texas, but noted that the board’s process for the move “has room for improvement,” Bloomberg reported.
Glass Lewis, meanwhile, urged shareholders to reject the proposal, saying it brings “uncertain benefits and additional risks.”
Musk has previously criticized the power of proxy advisers.
Proxy advisors help shareholders decide how to vote at shareholder meetings and can have a “significant influence” on investors’ voting decisions, one research firm said. report Published by the Corporate Governance Forum at Harvard Law School.
Musk has previously criticized the amount of influence these companies wield.
“Too much power is concentrated in ‘shareholder services’ firms like ISS and Glass Lewis because most of the market is passive/index funds that outsource shareholder voting decisions to them,” he wrote. post At X in January 2023.
“ISS and Glass Lewis effectively control the stock market,” he added.
Investors are scheduled to vote on his compensation package at Tesla’s annual meeting on June 13.
Musk, who also runs SpaceX, Neuralink and The Boring Company, has previously warned that he would develop products outside of Tesla in the future if his attempts to increase his stake in the electric vehicle maker are blocked.
Musk’s controversial compensation plan was initially approved by 73% of investors in 2018, but a Delaware judge invalidated it in January over concerns about its size and the independence of the board of directors.
Tesla’s board has since been trying to persuade investors to support the deal.
If the board can prove that investors still support it, that could help it appeal the decision to invalidate it.
But a defeat would be a major blow to the board and could call into question Musk’s leadership.