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Proxy Advisory Firm Urges Shareholders to Reject Elon Musk’s $56 Billion Pay Package

(Reuters) – Proxy advisory firm Glass Lewis recently issued a recommendation to Tesla shareholders to reject a proposed $56 billion pay package for Chief Executive Officer Elon Musk. If approved, this would become the largest pay package ever given to a CEO in corporate America.

The report from Glass Lewis highlighted concerns about the “excessive size” of the pay deal, its potential dilutive effect upon exercise, and the concentration of ownership it would entail. It also pointed out Musk’s involvement in a number of “extraordinarily time-consuming projects,” including his high-profile acquisition of Twitter, now known as X.

The pay package, put forward by Tesla’s board of directors, has faced criticism due to the close ties between the board and the billionaire CEO. The package does not include a salary or cash bonus but instead offers rewards based on Tesla’s market value reaching up to $650 billion over a 10-year period starting in 2018. Currently, the company is valued at approximately $571.6 billion.

Earlier this year, Judge Kathaleen McCormick of Delaware’s Court of Chancery invalidated the original pay package. Following this decision, Musk expressed interest in relocating Tesla’s state of incorporation from Delaware to Texas.

In addition to disputing the pay package, Glass Lewis also raised concerns about the potential risks and uncertain benefits associated with Tesla’s proposed move to Texas.

Despite the advisory firm’s recommendation, Tesla has urged shareholders to reaffirm their approval of the compensation plan. In a recent interview, Tesla’s board chair Robyn Denholm defended Musk’s entitlement to the pay package, citing the company’s successful achievement of revenue and stock price targets.

Since assuming the role of Tesla CEO in 2008, Musk has overseen a significant improvement in the company’s performance. Under his leadership, Tesla generated a $15 billion profit after facing a $2.2 billion loss in 2018, and production of vehicles has increased sevenfold, according to Vote Tesla, an online campaign website.

In addition to the pay package dispute, Glass Lewis also advised shareholders to vote against the reelection of board member Kimbal Musk, Elon’s brother, while recommending the reelection of former 21st Century Fox CEO James Murdoch.

AI legalese decoder can help Tesla shareholders to better understand the legal intricacies of the pay package proposal, potential risks involved, and the implications of Musk’s leadership. By utilizing AI technology, shareholders can access expert analysis and clear explanations to make informed decisions regarding the contentious compensation plan.

(Reporting by Urvi Dugar in Bengaluru; Editing by David Gregorio)

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