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Influential proxy advisory firm Glass Lewis urges Tesla (NASDAQ: Tesla) Shareholders rejected a proposed $56B compensation package for CEO Elon Musk, which was invalidated by a U.S. court earlier this year.
The electric car giant will Hold annual general meeting June 13participants will have the opportunity to vote on compensation packages including stock option awards.
Glass Lewis made the recommendations in a report released on Saturday and seen by Seeking Alpha. The consultancy noted that the plan had an “excessive” dilutive impact.
Delaware Judge Kathaleen McCormick invalidated Musk’s $56B compensation package in late January after a shareholder lawsuit claimed it was improperly approved.
“When the 2018 CEO Performance Awards were initially submitted to shareholders for approval, Glass Lewis raised a number of concerns about the awards, including the amount of compensation and the dilutive impact on disinterested shareholders. Such concerns include the lack of repricing prohibitions. Some of the concerns were clarified through subsequent company documents,” Glass-Lewis said.
“We find that our prior top concerns remain unchanged. The excessive size of the award, both on a pure dollar basis and in terms of the dilutive effect upon exercise, remains our top concern… The rationale provided by the company does little to allay these concerns, given the magnitude of them,” the consultancy added.
Musk appears to have the support of Tesla’s board of directors on the pay issue.
“Elon has not been compensated for any of the work he has done for Tesla (TSLA) over the past six years, which has helped deliver significant growth and shareholder value. This is frustrating to us and the many shareholders we have heard from “Shocked because this is fundamentally unfair and inconsistent with the wishes of the shareholders who voted in favor,” Chairman Robyn Denholm said in the company’s April proxy statement.
Tesla (TSLA) shareholders will also vote on approving the company’s move from Delaware to Texas at its annual meeting in June.
Glass Lewis recommended against Texas’ move, saying it was not in the interests of shareholders and created uncertain benefits and increased risk.
