Tesla Stock Drops 3% as Glass Lewis Urges Shareholders to Reject Musk Pay Package

Dow Jones05-28

Proxy advisory firm Glass Lewis added some drama to the coming Tesla annual shareholder meeting.

Tesla’s board is asking shareholders to reauthorize CEO Elon Musk’s compensation after a Delaware judge voided a 2018 pay package in January.

Over the weekend, Glass Lewis recommended that shareholders reject a proposal to reinstate CEO Elon Musk’s pay package worth some $56 billion when it was awarded in 2018.

Tesla didn’t immediately respond to a request for comment about the recommendation.

A Delaware court voided the package in January after a judge decided Tesla’s board didn’t adequately disclose potential conflicts of interest between Musk and the board. The package awarded Musk some 300 million options that vested based on hitting performance milestones.

Tesla’s board simply put the old pay package up for a new vote with additional disclosures. The issue will be decided at the company’s shareholder meeting on June 13.

A ‘no’ vote would send the board back to the compensation drawing board and potentially irritate Musk who has said he wants 25% voting control of Tesla stock to keep artificial intelligence projects inside the car company. With the 2018 pay package options, Musk has close to 20% voting control of Tesla stock.

Tesla stock is down 3.2% to $173.56 in morning trading Tuesday.

It’s a small move partly because the recommendation isn’t a surprise. Both ISS and Glass Lewis recommended voting against the pay package in 2018. The reasons also aren’t that surprising. The pay is an outlier in corporate America. There are few, if any, pay packages for any CEO that approximate what Musk received.

Of course, since the end of 2018, Tesla stock has expanded roughly eightfold, adding roughly $500 billion in market value. That’s one reason shareholders can feel happy with Musk.

The original proposal passed with more than 70% support from shareholders, despite the original objections from proxy advisor firms.

Coming into Tuesday’s trading, Tesla stock was about 28% year to date. Slowing demand growth for EVs and slowing sales growth for Tesla have weighed on investor sentiment.

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Comments

  • Boybabyrage
    05-28
    Boybabyrage
    This news definitely has an impact on Tesla stock overall. However, Musk is a smart ass guy who knows his stuff when it comes to business, set aside his arrogance and fool-around habit. I think Tesla will continue to grow. $Tesla Motors(TSLA)$  
    • Dr Rck: 
      So that means TSLA may not grow as well as he promised because of xAI? Which means investors may see dwindling potential …
    • Boybabyrage: 
      Yes, 💯 . Most of the big companies are competing for the AI markets. I would say it's a race on who can come up with a better solution. The winner will definitely boost the company's reputation, especially the stock price. $NVIDIA Corp(NVDA)$ is a good example here.
    • Dr Rck: 
      Do tou think he will put more focus on xAI more so than TSLA now that xAI has a pretty healthy vsluation of $24 bn to begin with?
  • AlanTLK
    05-28
    AlanTLK
    #FUKdowjones
  • Monkseal
    05-28
    Monkseal
    Give that sum to that extraordinary man! It's his anyway and he runs the show nobody else can. Else try giving that sum to another Tom Dick or Harry and you see the value of the company lose everything overnight? Don't be Penny Wise Pound Foolish!
  • L N Ramesh
    05-28
    L N Ramesh
    Share your opinion about this news…
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