Musk's $1 Trillion Tesla Pay Plan Draws Protest Ahead of Likely Approval
A compensation plan that could pay Elon Musk more than $1 trillion over the next decade has drawn criticism from proxy advisory firm Institutional Shareholder Services (ISS), which urged Tesla shareholders to reject the proposal. The plan, set for a shareholder vote on November 6, aims to retain Musk's focus and attention on Tesla by granting him up to 423.7 million shares.
According to ISS, the astronomical grant value could dilute the value of other shareholders' stakes due to the extreme number of shares being granted. "The award is questionable whether it is necessary or appropriate to further align his interests with Tesla when he currently holds a 19.8 percent ownership stake in the company," said ISS in its report.
ISS also expressed concerns that there are no prescriptive elements within the award to ensure Musk's focus remains on Tesla, rather than his other business ventures. "The primary rationale for this award is to retain Musk and keep his time and attention on Tesla, but it undermines itself by not having any mechanisms to enforce that," said ISS.
Tesla's compensation plan has been designed to incentivize Musk's continued involvement with the company, which has seen significant growth under his leadership. However, critics argue that the plan could have far-reaching implications for other shareholders. "This is a huge payout, and it's not clear what Tesla gets out of it," said David Trossman, a shareholder activist.
The proposal would grant Musk an ownership stake as high as 28.8 percent, surpassing his current 19.8 percent stake in the company. The ISS report noted that this could have significant implications for other shareholders, who may see their stakes diluted by the massive grant of shares to Musk.
Tesla's board has recommended approval of the compensation plan, citing its potential to retain Musk and drive further growth at the company. "We believe this plan is a key component in our efforts to continue driving innovation and success at Tesla," said Robyn Denholm, chairwoman of Tesla's board.
The shareholder vote on November 6 will determine the fate of the compensation plan. While ISS has urged rejection, many analysts expect the proposal to pass due to Musk's significant influence over the company.
*Reporting by Arstechnica.*
