Tesla Inc TSLA board of directors slammed proxy advisory firm Glass Lewis on Wednesday after it urged shareholders to vote against CEO Elon Musk‘s rescinded 2018 pay package. The findings of the firm, the board alleged, are based on “faulty logic” and “speculation.”
What Happened: “In its report, Glass Lewis omits key considerations, uses faulty logic, and relies on speculation and hypotheticals,” the board wrote in a letter to shareholders.
Earlier this week, Glass Lewis recommended that shareholders reject Musk’s rescinded pay package worth $56 billion at the time of award citing reasons including “excessive size” and concentration of ownership within the company. The firm also highlighted Musk’s numerous time-consuming projects outside Tesla, including his acquisition of the company Twitter, now known as X.
Shareholders will vote on moving Tesla’s state of incorporation from Delaware to Texas and Musk’s rescinded 2018 pay package ahead of the upcoming meeting in June. The pay package was rescinded by a Delaware court earlier this year after deeming it an "unfathomable sum." Tesla’s board is trying to have it reinstated by a shareholder vote yet again.
In its letter, the board noted that Musk’s 2018 pay package was overwhelmingly approved by shareholders at the time of award and it has helped raise value for stockholders by about 1,100% from 2018 to 2023. Musk hit the “difficult” targets mandated by the package and created over $735 billion of market value, they said.
“Tesla believes it should abide by its commitment to Elon as Elon delivered on his commitment to Tesla. A deal is a deal. That is the fair and ethical thing to do,” it said.
Other Proposals: The board also urged shareholders to vote for shifting Tesla’s state of incorporation to Texas saying that combining Tesla’s headquarters with its legal domicile would provide “tangible benefits” similar to Microsoft and Apple. It also noted that about 35% of the S&P 500 is incorporated outside of Delaware.
Glass Lewis had recommended that shareholders vote against incorporating Tesla into Texas citing ‘uncertain benefits.’
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