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Proxy advisory firm Glass Lewis said on Saturday it has urged Tesla shareholders to reject Chief Executive Officer Elon Musk’s $56 billion pay package, which, if passed, would be the largest pay package for a U.S. corporate CEO.
The report cited a number of reasons, including “excessive amounts” in compensation agreements, dilutive effects on exercise and concentrated ownership. It also cited Musk’s “series of extremely time-consuming projects” that expanded with his high-profile acquisition of Twitter, now called X.
The pay package, proposed by Tesla’s board, which has been repeatedly criticized for its close ties to the billionaire, has no salary or cash bonuses and instead bases rewards on Tesla’s market value rising to $650 billion over 10 years from 2018. The company’s current market value is about $571.6 billion, according to the London Stock Exchange.
In January this year, Delaware Chancery Court Judge Kathaleen McCormick declared the original compensation plan invalid. Musk then sought to move Tesla’s registered address from Delaware to Texas.
Glass Lewis also criticized the proposed move to Texas, saying it would create “uncertain benefits and additional risks” for shareholders.
Tesla has urged shareholders to reaffirm their approval of the pay.
In an interview this month, Tesla board chair Robyn Denholm told the Financial Times that Musk deserved the pay because the company had achieved ambitious revenue and share price targets.
Musk became Tesla’s chief executive in 2008. In recent years, he has helped improve the company’s performance, turning it into a $15 billion profit from a $2.2 billion loss in 2018 and increasing vehicle production sevenfold, according to online campaign site Vote Tesla.
The proxy advisory also recommended that shareholders vote against billionaire brother Kimbal Musk’s reelection to the board, while recommending that former 21st Century Fox CEO James Murdoch be re-elected.
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