An advisory group recommended Tesla shareholders vote down a proposed $1 trillion pay package for CEO Elon Musk.
What's happening?
Institutional Shareholder Services said approval would lock in unsustainable "high pay opportunities" going forward and may dilute investors' holdings, according to Teslarati. The package can also be paid partially, meaning Musk could reap billions of dollars while failing to meet market cap, vehicle delivery, and other goals.
"Proxy advisers often sway major institutional investors, including the passive funds that hold large stakes in Tesla," Reuters noted. It added that Musk will be able to weigh in on the measure, accounting for 13.5% of votes.
ISS previously recommended shareholders vote against a $56 billion pay package that was voided in court last year.
In response, Tesla moved its headquarters from Delaware to Texas, as Ars Technica pointed out. The outlet also detailed problems with the package, including increasing Musk's ownership stake from 19.8% to 28.8%, vague goals that can be easily met, and the allowance of "only a part-time commitment," citing a letter to shareholders from the New York City comptroller.
It said Musk's brother, Kimbal, who sits on the company's nine-person board of directors, will also get to vote at the Nov. 6 meeting.
Why is this important?
While it has struggled with sales and problems of Musk's making, Tesla is still the leading electric vehicle manufacturer in the United States and a top option around the world.
Whichever brand drivers choose, switching from a gas-powered vehicle to an electric one saves drivers $1,500 yearly on gas and maintenance and produces significantly less polluting gases that enter the atmosphere, saving people's health and preventing further heating of the warming planet.
The comptroller slammed the board's "longstanding" lack of independence and said not requiring Musk to "[limit] outside endeavors … strongly indicates a lack of true independence by management and jeopardizes long-term shareholder value."
What's being done about the pay package?
While there will be a vote next week, it seems like a foregone conclusion that the package will be approved. Not all shareholders or Tesla fans would be pleased.
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The government 🏛️ "I'd rather the board fire Musk outright as CEO," one Teslarati commenter wrote. "Amazing business sense for sure, but about the lowest [emotional intelligence] of any leader I've ever seen. Tesla's path is set for the next 10 years. I don't think he really adds much value anymore. More likely negative value."
Another said, "Musk getting those unreal 'astronomical' pay packages somehow supposesthat Tesla company could grow astronomical amount at all despite being in the leashof a fascistoid con man."
"Tesla only has a future because BYD can't be sold in America," someone else noted.
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