Shareholders urged to reject Elon Musk’s $56B Tesla pay package

During an appearance on Varney & Co., Circle Squared Alternative Investments’ Jeff Sica shared his insights on the earnings of Big Tech companies and discussed the performance of Tesla stock.

Tesla shareholders are currently set to vote on the reinstatement of CEO Elon Musk’s $56 billion pay package, which was previously voided by a Delaware judge earlier this year. However, a proxy advisory firm is urging shareholders to reject the proposal.

Glass Lewis has recommended that Tesla shareholders reject the proposed package due to concerns over its excessive size, the potential impact of Musk exercising the stock options, and the concentration of ownership within the company.

The article highlights Musk’s numerous time-consuming ventures, particularly after taking over Twitter, now rebranded as X, where he holds the positions of chief technology officer and executive chairman. Additionally, Musk serves as the CEO of SpaceX and xAI, an artificial intelligence company, and is the founder of Neuralink and The Boring Company.

Tesla’s board of directors has put forward a proposal to reintroduce a pay package that includes no salary or cash bonus. Instead, it offers rewards in the form of stock options, which will be granted if Tesla’s market value reaches up to $650 billion within the 10 years after 2018. As of now, the company is valued at approximately $571.6 billion, according to LSEG data.

In January, Judge Kathaleen McCormick of Delaware’s Court of Chancery nullified Musk’s initial pay package. A shareholder had filed a lawsuit to invalidate the package, and the judge sided with the shareholder. In her ruling, Judge McCormick stated that the compensation package was excessively large, making it the largest ever for a CEO of a publicly traded company.

Read More:  Whew! Country star Jimmie Allen reveals he secretly welcomed TWINS with another woman while divorcing his wife: 'I refuse to allow anyone to make me feel ashamed.'
Ticker Security Last Change Change %
TSLA TESLA INC. 179.24 +5.50 +3.17%

McCormick criticized the Tesla board of directors for not fully disclosing to shareholders the close relationship between the directors who approved Musk’s compensation package. Additionally, McCormick pointed out that the board did not adequately explain how easily Tesla would achieve the benchmarks tied to Musk’s compensation plan, considering the company’s growth at the time.

During an interview with the Financial Times, Tesla board chair Robyn Denholm expressed her support for Elon Musk’s compensation plan and encouraged shareholders to reaffirm their approval. Denholm stated that Musk deserves the pay package due to Tesla successfully achieving ambitious targets for both revenue and stock price.

After the January ruling nullified the pay package, Musk took steps to shift Tesla’s state of incorporation from Delaware to Texas. This proposal is now up for a vote among shareholders.

Tesla experienced a decrease in its quarterly sales for the first time in almost four years during the first quarter of this year.

The proxy advisor has strongly advised shareholders to reject the proposal to change Tesla’s incorporation state, citing potential uncertainties and increased risks that could negatively impact shareholders.

Elon Musk has been leading Tesla as its CEO since 2008 and has played a crucial role in propelling the electric vehicle manufacturer to become the most valuable automaker based on market capitalization. Under his guidance, the company transformed from a $2.2 billion loss in 2018 to a $15 billion profit. Furthermore, Musk has successfully scaled up vehicle production by a remarkable factor of seven, as highlighted by the Vote Tesla campaign website.

Read More:  Suicide risk doubles following male-to-female procedures, according to a California study

Tesla experienced a decline in sales volume during the first quarter, marking the first time in almost four years that the company faced a slowdown in consumer interest in electric vehicles (EVs).

Read More:

Leave a Comment