Welcome to the Extreme Investor Network, where we provide you with unique insights and expert analysis on all things finance. Today, we bring you the latest news on Tesla’s Chief Executive Officer Elon Musk and the controversial $56 billion pay package proposed for him.
Proxy advisory firm Glass Lewis has urged Tesla shareholders to reject this unprecedented pay package for Musk, which would make it the largest ever for a CEO in corporate America. The firm cited concerns about the “excessive size” of the deal, the potential dilutive effect on current shareholders, and the concentration of ownership in Musk’s hands. Additionally, Glass Lewis highlighted the growing list of time-consuming projects Musk is involved in, including his recent high-profile purchase of Twitter, now known as X.
The pay package, proposed by Tesla’s board of directors, has faced criticism for its lack of salary or cash bonus, instead offering rewards based on the company’s market value reaching up to $650 billion over a 10-year period. Currently, Tesla’s market value stands at around $571.6 billion. Earlier this year, a Delaware court voided the original pay package, prompting Musk to seek to move Tesla’s state of incorporation to Texas.
Glass Lewis also raised concerns about the potential risks associated with relocating Tesla to Texas, calling it a move that offers “uncertain benefits and additional risk” to shareholders. Despite these criticisms, Tesla has urged shareholders to reaffirm their approval of the compensation package.
In a recent interview, Tesla’s board chair Robyn Denholm defended Musk’s pay package, stating that he deserved it due to the company’s success in hitting ambitious revenue and stock price targets. Since Musk became CEO in 2008, Tesla has seen significant improvements in its financial results, with a $15 billion profit reported after a $2.2 billion loss in 2018, and a sevenfold increase in vehicle production.
Glass Lewis also recommended that shareholders vote against the reelection of board member Kimbal Musk, Elon’s brother, while former 21st Century Fox CEO James Murdoch’s reelection was endorsed.
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