Benzinga - by Shivani Kumaresan, Benzinga Staff Writer.
Tesla Inc. (NASDAQ:TSLA) has come forward to defend a proposal to ratify CEO Elon Musk‘s $56 billion pay package, asserting that a new compensation structure would be even more expensive.
This defense comes after a prominent proxy advisory firm urged shareholders to vote against the proposal, according to a report from Reuters.
The electric vehicle giant contends that Musk’s substantial pay package, among the largest in corporate America, has driven him to generate significant value for shareholders.
Last week, Institutional Shareholder Services (ISS) criticized the pay as excessive and expressed concerns about Tesla presenting an all or nothing option to shareholders ahead of the annual meeting on June 13.
Another proxy advisory firm, Glass Lewis also urged shareholders to vote against Musk’s pay package.
The compensation plan, established and approved by shareholders in 2018, links rewards to Tesla’s market value and operational milestones.
Also Read: Elon Musk’s Potential Purchase Of House From Tesla Director Raises Governance Concerns: Report
However, a Delaware judge invalidated the plan in January, prompting Tesla to seek incorporation in Texas. In a recent filing, Tesla argued that ISS’s recommendation was based on a technical misunderstanding and noted that the advisory firm acknowledged Tesla’s strong performance under Musk.
Tesla emphasized that under Delaware law, ratification means the proposal must be accepted or rejected in its entirety.
The company warned that creating a new pay package would be more expensive for shareholders. “A functionally equivalent grant of new options could result in an accounting charge exceeding $25 billion, compared to the $2.3 billion charge originally recognized for the 2018 award,” Tesla stated.
The company reinforced its position by stating, “A deal should be a deal. He delivered on his end of the bargain. It’s time for us to deliver on ours.”
Tesla stock has lost more than 17% in the last 12 months. Investors can gain exposure to the stock via ETFs, including Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) and Fidelity MSCI Consumer Discretionary Index ETF (NYSE:FDIS).
Price Action: TSLA shares are trading higher by 1.16% at $180.14 at last check Monday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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