Top proxy advisory firm Institutional Shareholder Services (ISS) has urged Tesla shareholders to vote against CEO Elon Musk’s jaw-dropping $56 billion pay package. ISS slammed the compensation as “excessive,” marking a significant rejection of the plan laid out by Tesla’s board.
The vote, set for Tesla’s annual meeting on June 13, is seen as a critical referendum on Musk’s leadership. Investors are increasingly worried that Musk, distracted by his myriad other ventures and notorious for his controversial statements, is tarnishing Tesla’s reputation and sales.
The pay package, the largest ever for a corporate CEO in America, was designed around Tesla’s market value and operational milestones. However, a Delaware judge voided the plan in January, prompting Tesla to consider reincorporating in Texas.
Despite these setbacks, Tesla has pushed for a reratification vote on the 2018 pay plan. ISS’s damning report argues that while the pay structure may have driven Tesla’s growth, the award remains outrageously high. It also suggests that the plan failed to keep Musk focused on Tesla’s interests, leaving his financial priorities misaligned with those of shareholders.
Adding fuel to the fire, ISS also recommended a vote against Tesla director James Murdoch, citing concerns about the board’s risk oversight. However, it backed votes for Musk’s brother, Kimbal, and the proposed move to Texas.
Tesla, for its part, has been rallying support for Musk’s pay, insisting in a securities filing that Musk has been creating wealth for stockholders and has substantial personal stakes in the company.
As the showdown looms, Tesla’s stock has taken a hit, sliding slightly in premarket trading and plunging 28% this year.
