(Reuters) – Consulting firm Glass Lewis said on Saturday it had urged Tesla (NASDAQ:) shareholders to reject a $56 billion pay package for CEO Elon Musk, which if passed would be the largest pay package for a CEO in corporate America.
The report cited reasons such as the “excessive size” of the pay deal, the dilutive impact on practice and concentration of ownership. She also noted Musk's “extremely time-consuming list of projects” that expanded with his high-profile purchase of Twitter, now known as X.
The pay package was proposed by the board of Tesla, which has been repeatedly criticized for its close ties to the billionaire. The package does not include a salary or cash bonus and bonuses are based on Tesla's market capitalization, which rises to as much as $650 billion over the 10 years as of 2018. The company is currently valued at about $571.6 billion, according to LSEG data.
In January, Judge Kathleen McCormick (NYSE:) of the Delaware Court of Chancery invalidated the original pay package. Musk then sought to move Tesla's jurisdiction from Delaware to Texas.
Glass Lewis also criticized the proposed move to Texas as offering “uncertain benefits and additional risks” to shareholders.
Tesla urged shareholders to reaffirm their agreement to compensation.
In an interview this month, Tesla Chairman Robin Denholm told the Financial Times that Musk deserved the pay package because the company had met ambitious targets for revenue and its stock price.
Musk became Tesla's CEO in 2008. In recent years, he has helped improve results, leading the company to generate $15 billion in profits from a $2.2 billion loss in 2018, and to produce seven times more cars, according to the campaign's website. Online, Vote Tesla. .
The proxy advisor also recommended shareholders vote against the re-election of board member Kimbal Musk, the billionaire's brother, while former 21st Century Fox CEO James Murdoch was recommended for re-election.
