Proxy advisory firm Institutional Shareholder Services (ISS) has reportedly advised shareholders of Tesla, Inc. TSLA to vote against the ratification of CEO Elon Musk‘s $56 billion pay package, following a similar recommendation by Glass Lewis last week.
What Happened: ISS called the pay package “excessive” despite the company’s success and recommended shareholders to vote against it, Reuters reported. However, the firm backed the company’s proposed move of its state of incorporation from Delaware to Texas.
ISS also recommended a vote against Tesla director James Murdoch, but backed votes for director Kimbal Musk, Musk’s brother, and for the company’s proposed move to change its state of incorporation to Texas from Delaware.
“In addition, the grant, in many ways, failed to achieve the board’s other original objectives of focusing CEO Musk on the interests of Tesla shareholders, as opposed to other business endeavors, and aligning his financial interests more closely with those of Tesla stockholders,” ISS’ report said. Other concerns include “a lack of clarity on the board’s plan” for Musk’s future pay, ISS wrote, as per Reuters.
See Also: Everything You Need to Know About Tesla Stock
Why It Matters: Last week, Glass Lewis, recommended shareholders vote against Musk’s 2018 pay package, citing reasons including excessive size and concentration of ownership within the company. The firm also recommended voting against incorporating Tesla into Texas, citing uncertain benefits.
Tesla’s board disputed Glass Lewis’ findings, calling them “based on faulty logic” and “speculation” in a letter to shareholders earlier this week. The board said that Musk hit the “difficult” targets mandated by the package, created over $735 billion of market value, and helped raise value for stockholders by about 1,100% from 2018 to 2023.
Shareholders will vote on Tesla’s move to incorporate in Texas and Musk’s rescinded 2018 compensation ahead of the June 13 meeting. The pay package, worth $56 billion at the time of award, was rescinded by a Delaware court earlier this year after deeming it an “unfathomable sum.”
Musk on Thursday slammed shareholders who voted for his package in 2018 but are now voting against it as “oathbreakers.” He also slammed the California Public Employees' Retirement System (CalPERS) as lacking honor after the public pension fund’s CEO Marcie Frost announced its decision to vote against Musk's pay package.
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