Top Tesla Investor Counsels Against Musk’s $56 Billion Salary Offer

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Vanguard, the second-largest shareholder in Tesla after Elon Musk, has been advised by the influential proxy advisory firm Glass Lewis to vote against Musk’s historic $56 billion (£44 billion) bonus. Glass Lewis described the payment as “excessive” and warned that it would dilute the stakes of existing investors and concentrate power with Musk.

The advisory comes ahead of a crucial shareholder vote on June 13, which could have significant implications for Tesla’s future. Investors initially approved the $56 billion payment in 2018, contingent on Musk meeting certain performance targets. However, in January of this year, a Delaware judge voided the agreement, stating that Tesla’s directors had failed to fully inform shareholders during the negotiation process. The judge also described the deal as “unfathomable” and suggested that the board had been blinded by Musk’s “superstar appeal.”

Glass Lewis argued that the pay package has so far failed to keep Musk focused on Tesla, as he has pursued various side projects, including his Space X rocket venture and the takeover of Twitter, now rebranded as X. The report noted that while it is unreasonable to expect unwavering focus at all times, Tesla has become “reliant on the presence of one individual for its success,” and the lucrative pay deal appears ineffective in keeping Musk focused on the company.

The report also highlighted that Musk’s projects outside of Tesla have been attracting criticism and raised concerns over the risk to shareholder value. While Tesla could choose to ignore the outcome of next month’s pay vote, as it is advisory, the carmaker’s board may use widespread backing for the deal to launch an effective legal appeal against the Delaware judgement. Musk has vowed to move Tesla’s legal incorporation to Texas after the ruling.

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