SpaceX and Tesla CEO Elon Musk attends the Viva Technology conference at the Porte de Versailles exhibition center in Paris on June 16, 2023.
Gonzalo Fuentes | Reuters
Leading proxy advisor Institutional Shareholder Services is recommending Tesla investors vote against a pay plan for CEO Elon Musk that would give him nearly $1 trillion more shares.
The “mega-performance equity award” to Musk, intended to keep the CEO long-term, “has an astronomical award value that depends on far-reaching performance targets that, if achieved, would create tremendous value for shareholders,” ISS wrote on Friday.
Tesla’s 2025 annual shareholder meeting and proxy vote is scheduled for November 5th. The company is expected to report third-quarter results on Wednesday.
ISS said that while some shareholders may support the compensation plan, there are “unfounded concerns about the size and design of the special award.”
If approved, Musk’s plan would be the largest ever awarded to a CEO of a publicly traded company. This could give Musk an additional 12% stake in Tesla should the company reach an $8.5 trillion market cap and achieve other goals.
Tesla disagreed with the ISS recommendations.
In a post on
The company asked shareholders to approve the board’s recommendations on all 2025 proxy voting proposals.
ISS had previously advised investors to reject a “ratification” of Musk’s 2018 CEO pay package, which was then worth an estimated $56 billion.
The Delaware Chancellor’s Court ruled early last year that the 2018 compensation plan was improperly granted by Tesla’s board and should be revoked. The ruling said Tesla hid important details from shareholders that they were entitled to before the vote and that Musk controlled the board.
Musk has appealed that court’s decision to the Delaware State Supreme Court. The opening arguments of the appeal were heard by a panel of judges this week.
ISS officials declined to comment beyond the report.
ISS, along with Glass Lewis and smaller competitors, can influence how shareholders decide to vote in annual elections. Musk accused ISS and Glass Lewis in 2023 of effectively controlling the stock market in some matters due to their influence with passive or index funds. He also baselessly compared the ISS to a terrorist organization.
Musk can vote with his own shares when voting on his future salary. According to the latest available information about his holdings, he holds at least 13.5% of Tesla’s voting rights. Those holdings alone could be enough to win approval for the nearly $1 trillion pay package.
In September, Musk increased his holdings in Tesla shares and bought another $1 billion worth of shares.
Among other ISS recommendations, the company also suggested that shareholders vote against giving Tesla’s board approval to invest in xAI, the AI company that Musk founded in March 2023 but did not publicly announce until July of that year. Tesla has sold tens of millions of dollars worth of its Megapack battery storage systems to xAI.
ISS also recommended not voting to reinstate Tesla board member Ira Ehrenpreis, a longtime and close friend of Musk.
In May, Tesla changed its corporate charter to limit shareholders’ ability to sue for breach of fiduciary duties, allowing only a shareholder who owns at least 3% of the company’s shares to file a so-called “derivative” lawsuit. Ehrenpreis was chairman of Tesla’s governance committee at the time the change was made without a shareholder vote.
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