[US] ISS tells Tesla shareholders to veto Musk’s 'excessive' $56bn pay package

In the US, proxy advisory firm ISS has become the second advisory body to call on Tesla investors to vote against a $56 billion pay packet for CEO Elon Musk, HR Grapevine reports.

ISS follows competitor Glass Lewis in advising shareholders to veto the package it described as ‘excessive.’

The massive compensation plan would be the biggest for any CEO in corporate America.

According to Tesla, the multi-billion-dollar outlay is justified by the market value of Tesla and its progress toward operational goals.

In January, a judge in Delaware reportedly voided the compensation plan - set in 2018 - citing conflicts of interest and a failure by Tesla to disclose the plan’s details in full. 

In response, the electric vehicle maker moved to reincorporate in Texas, where – if shareholders approve Mr Musk’s $56 billion pay package – any investor unhappy with the arrangement would have to mount a fresh legal challenge.

Tesla has asked investors to vote on the plan in an annual shareholder meeting on June 13 while ISS pushed investors to reject the plan. 

Its report reads, “Although the structure of the grant’s performance hurdles arguably contributed to, as well as reflect, the company’s significant financial growth during the performance period, the total award value remains excessive, even given the company’s success.”

In addition, the report draws attention to a lack of clarity on what the vote would mean for Mr Musk’s future compensation packages, stating that the grant does not focus him on the interest of Tesla’s shareholders over his other business endeavours.

Some investors at Tesla are reportedly concerned that the controversial CEO is distracted by his other businesses including X, xAI, and SpaceX, together with his divisive comments in the media. As a result, the vote is being seen by some as a referendum on Mr Musk himself.

Tesla has yet to respond to ISS but did push back against remarks from Glass Lewis, arguing that Mr Musk creates wealth for Tesla and its investors and saying it is necessary to ensure he prioritises Tesla above his other work.

In recent years, the growing gap in the CEO-average employee pay ratio was highlighted by several studies. According to an Economic Policy Institute study, the ratio was 399:1 in 2021. The study specifically excludes Elon Musk because his ratio would have skewed the results.

Earlier this year, Oxfam reportedly revealed that the wealth of the world’s five richest men had nearly doubled since 2020 to reach $869 billion by November 2023, while almost five billion people become poorer in the same period.

Source: HR Grapevine

(Quote via original reporting)

In the US, proxy advisory firm ISS has become the second advisory body to call on Tesla investors to vote against a $56 billion pay packet for CEO Elon Musk, HR Grapevine reports.

ISS follows competitor Glass Lewis in advising shareholders to veto the package it described as ‘excessive.’

The massive compensation plan would be the biggest for any CEO in corporate America.

According to Tesla, the multi-billion-dollar outlay is justified by the market value of Tesla and its progress toward operational goals.

In January, a judge in Delaware reportedly voided the compensation plan - set in 2018 - citing conflicts of interest and a failure by Tesla to disclose the plan’s details in full. 

In response, the electric vehicle maker moved to reincorporate in Texas, where – if shareholders approve Mr Musk’s $56 billion pay package – any investor unhappy with the arrangement would have to mount a fresh legal challenge.

Tesla has asked investors to vote on the plan in an annual shareholder meeting on June 13 while ISS pushed investors to reject the plan. 

Its report reads, “Although the structure of the grant’s performance hurdles arguably contributed to, as well as reflect, the company’s significant financial growth during the performance period, the total award value remains excessive, even given the company’s success.”

In addition, the report draws attention to a lack of clarity on what the vote would mean for Mr Musk’s future compensation packages, stating that the grant does not focus him on the interest of Tesla’s shareholders over his other business endeavours.

Some investors at Tesla are reportedly concerned that the controversial CEO is distracted by his other businesses including X, xAI, and SpaceX, together with his divisive comments in the media. As a result, the vote is being seen by some as a referendum on Mr Musk himself.

Tesla has yet to respond to ISS but did push back against remarks from Glass Lewis, arguing that Mr Musk creates wealth for Tesla and its investors and saying it is necessary to ensure he prioritises Tesla above his other work.

In recent years, the growing gap in the CEO-average employee pay ratio was highlighted by several studies. According to an Economic Policy Institute study, the ratio was 399:1 in 2021. The study specifically excludes Elon Musk because his ratio would have skewed the results.

Earlier this year, Oxfam reportedly revealed that the wealth of the world’s five richest men had nearly doubled since 2020 to reach $869 billion by November 2023, while almost five billion people become poorer in the same period.

Source: HR Grapevine

(Quote via original reporting)