On Monday, Tesla defended CEO Elon Musk’s $56 billion compensation package, arguing that renegotiating a new pay deal would be even more expensive. This defense comes just days after a leading proxy advisory firm advised shareholders to vote against the proposal.
Tesla stated Elon Musk’s pay package largest in corporate America
Tesla stated that Elon Musk‘s massive pay package, one of the largest in corporate America, has driven him to generate significant value for shareholders.
This defense came after Institutional Shareholder Services (ISS) criticised the compensation as “excessive” last week and expressed concerns about Tesla presenting shareholders with an “all or nothing” choice before the upcoming vote at their annual meeting on June 13.
Shareholders approved Musk’s compensation package in 2018, tying his rewards to Tesla’s market value and operational milestones. However, a Delaware judge nullified the package in January, prompting Tesla to consider moving its incorporation to Texas.
In a filing on Monday, Tesla argued that the ISS recommendation was based on a “technical misunderstanding,” emphasising that the advisory firm acknowledged the company’s strong performance under Musk’s leadership.
Tesla explained that under Delaware law, shareholders must either fully accept or reject the proposal. They also noted that negotiating a new pay package for Musk would be more expensive for shareholders.
“A new set of options could lead to an accounting charge exceeding $25 billion, compared to the $2.3 billion charge initially recognised for the 2018 award,” Tesla stated.
“A deal is a deal. Musk fulfilled his part of the agreement, and now it’s our turn to fulfill ours.”
