Glass Lewis, a prominent proxy adviser, has dealt a significant blow to Tesla and its CEO Elon Musk by urging shareholders to vote against Musk’s $56 billion pay award and a proposal to move the company’s incorporation to Texas. In a report released on Saturday, Glass Lewis criticized Musk’s share options package as unduly dilutive and of “excessive size”, while also questioning the benefits and risks associated with relocating Tesla to Texas.
The proxy adviser also raised concerns about Musk’s involvement in various time-consuming projects, including the acquisition and overhaul of Twitter, now known as X, which Glass Lewis believes are diverting his attention from leading Tesla effectively. With Musk also overseeing SpaceX, Neuralink, and the Boring Company, Glass Lewis highlighted the potential impact on Tesla’s operations.
Tesla’s board has been actively lobbying investors to re-approve the controversial $56 billion pay award, which was previously struck down by a Delaware judge. Despite facing opposition from major institutional investors such as Vanguard and Capital Group, the proposal was initially approved with 73% support.
The upcoming annual meeting on June 13 will be crucial for Tesla, as it seeks to secure investor backing for Musk’s pay package and the relocation to Texas. The outcome of the vote could have significant implications for Musk’s future at the company and the overall direction of Tesla, which he envisions as an AI and robotics-focused entity.
As the battle for shareholder approval intensifies, Tesla faces the challenge of convincing retail investors, who hold a substantial 30% stake in the company, to support the resolutions. With Glass Lewis’s recommendations and the upcoming report from ISS looming, the outcome of the annual meeting could shape the future trajectory of Tesla and Elon Musk’s leadership.