Home India News Cheap Flights Hotel Booking Shopping Deals Web Hosting Education Pdf Books Test Series Filmybaap Contact Us Advertise More From Zordo

Tesla shareholders urged to reject Elon Musk's $56 billion package

2 weeks ago 15



Vote on Elon Musk's $56 billion pay package

Tesla to vote on Elon Musk's $56 billion pay package after mass layoffs 02:38

Tesla shareholders should reject CEO Elon Musk's $56 billion pay package, according to proxy advisory firm Glass Lewis, which singled out the "excessive size" of the deal and its potentially negative impact on smaller shareholders. 

The recommendation from the influential proxy advisory company comes as Tesla is asking its shareholders to vote again on his 2018 pay package after a Delaware judge earlier this year nullified the payout, which was the biggest compensation plan in corporate America. 

Tesla shareholders are set to vote on the pay package on June 13. The company didn't immediately respond to a request for comment about Glass Lewis' recommendation to vote against the pay deal.

Proxy advisory firms are relied on by institutional investors to provide research and advice on how to vote during annual and special meetings on public companies' proxy proposals, which can range from executive compensation to corporate governance issues. In Tesla's case, Glass Lewis wrote in a 71-page report, shared with CBS MoneyWatch, that Tesla shareholders risk stock dilution if Musk is granted the massive stock grant, meaning that their shares could be worth less as a result. 

The proxy advisory firm also noted that Musk is well compensated through his current 12.9% ownership of Tesla, a stake that is valued at about $74 billion, according to the Bloomberg Billionaires Index. Musk doesn't receive a salary from Tesla, but Glass Lewis noted that his shares in the company mean that his interests are already aligned with that of the business.

Deadly Tesla crash and burn in Weston 00:27

The value of Musk's current Tesla stake "challenges the very basis that the 2018 grant as structured and sized was even necessary," Glass Lewis wrote.

Dilution occurs when a company issues additional stock, which in turn shrinks the proportional ownership stake of pre-existing shares. Under the 2018 pay deal for Musk, Tesla would issue about 304 million new shares, creating a dilution effect of about 9%, the firm said. 

"[T]hese concerns are exacerbated by the concentration of ownership in Mr. Musk," the report said, noting that Musk would increase his ownership stake to 22.4% if the 2018 pay package were to be approved next month. "Mr. Musk would be the Company's largest shareholder by a healthy margin."

It added, "Given the impact on the holdings of other shareholders, the continued concentration of ownership around Mr. Musk warrants particular attention."

Aimee Picchi

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

Read Entire Article