Tesla has slammed advisory firm Glass Lewis after its recommendation that shareholders vote against CEO Elon Musk’s $44.9 billion pay package and the automaker relocation to Texas.
The consultants’ report was published earlier this week, and on Wednesday Tesla responded in a letter [PDF] sent to shareholders, accusing the advisors of “[omitting] key considerations, [using] faulty logic, and [relying] on speculation and hypotheticals,” regarding Elon’s pay package.
The payout was valued by Glass Lewis at $44.9 billion, substantially down from its valuation of $56 billion earlier this year due to the declining price of Tesla stock.
The Tesla letter argues for the reinstatement of Musk’s 2018 pay package primarily because the CEO met the original requirements to receive it and because in doing so he has made Tesla stock far more valuable than it was in 2018. In fact, in every single one of its five points, the letter makes sure to mention the increased value of Tesla shares over the five-year period from 2018 to 2023, which is measured at around 1,100 percent.
As for the move to Texas, Tesla’s letter denies this would diminish shareholder rights, or that litigation over the move would be against corporate interests.
That said, Tesla doesn’t exactly give Glass Lewis much of a chance to have its stance represented in full. While most of Tesla’s counter arguments are a few paragraphs long, each excerpt from the advisors’ 71-page report is only a sentence long, sometimes even truncated. Considering the letter charges Glass Lewis with omitting key info, it’s curious that the firm is only quoted by the sentence.
Additionally, the electric vehicle manufacturer may be making some omissions of its own. For instance, it only cites financial performance from 2018 to 2023, the period in which Musk achieved the goals stated in the terms of the pay package. However, Tesla has been one of the worst performing stocks in the S&P500 in 2024; it’s down 28 percent year-to-date.
Tesla also neglects to mention that a Delaware court struck down the original pay package because it found that Tesla board members were incentivized to give their CEO generous compensation due to their friendly ties to Musk and potential financial gains. A letter penned by New York City’s comptroller and other financial entities cited these ties as a key reason why they recommended a vote against the pay package.
The proxy advisory firm also recommended a vote against appointing Tesla co-founder JB Straubel to the board, cautioning he was not “independent.”
The vote on the pay package, Texas relocation, and other proposals is set to take place on June 13. There may be considerably higher turnout than normal, given the intense campaigns from Musk supporters and critics. ®