Tesla and Chief Executive Elon Musk continue to struggle to encourage shareholders to vote in favour of the latter’s $56 billion pay package. According to Reuters, a proxy advisory firm is calling for a vote against the proposal.
Tesla board’s proposals
Tesla’s shareholders have been voting on some new proposals of the board, including the 2018 CEO pay package and incorporation relocation to Texas.
Tesla’s board and CEO believe that they lost the lawsuit repealing the 2018 pay package because the trial was in Delaware. CEO Musk assumes the judge’s “Tornetta decision” was politically motivated. Therefore, he is highly optimistic that the case would be easier in Texas.
“We do not agree with what the Delaware Court decided, and we do not think that what the Delaware Court said is how corporate law should or does work. So we are coming to you now so you can help fix this issue.”
Board Chairperson Robyn Denholm stated in a letter to shareholders in April
To persuade shareholders, Tesla’s board even created a website and bought ads to promote votes in favour of the proposals.
Glass Lewis recommends a vote against Musk’s pay
Despite the Tesla board’s intensified efforts, major shareholder advisory firm Glass Lewis is promoting a vote against the abovementioned proposals. In hindsight, it also went against CEO Musk’s $56 billion pay package in 2018.
The report outlined various reasons, such as the “excessive size” of the pay package, its dilutive effect upon exercise, and the ownership concentration. Moreover, it also asserted CEO Musk’s “slate of extraordinarily time-consuming projects.”
Glass Lewis also criticized the proposal to move Tesla’s incorporation to Texas as offering “uncertain benefits and additional risk” to shareholders.
Tesla boss threatens AI development
In response, Tesla CEO Elon Musk regurgitated his plans to cancel plans to develop AI products for the electric automaker unless he gains 25% control over it.
The American billionaire’s AI startup xAI has already secured $6 billion on a new series B round at a $24 billion valuation.
Now, Tesla and Musk’s supporters are using scare tactics to influence the proxy battle vote in favour of the CEO.
If passed, Tesla CEO Elon Musk’s $56 billion pay package would be the biggest of its kind for a CEO in corporate America. The votes will transpire at Tesla’s upcoming annual meeting on June 13, 2024.
