Tesla board criticizes company for opposing Musk’s pay ratification

Tesla’s board of directors has responded to one proxy advisory firm that recently urged its investors to vote against ratifying Elon Musk’s 2018 pay package, ahead of the upcoming annual shareholders meeting. In it, the board writes that the firm was right to urge investors to vote in favor of proposal three, or moving incorporation from Delaware to Texas, adding that it missed important points in encouraging them to vote against proposal four, ratifying Musk’s previously approved $56 billion compensation package.

The board highlighted the concentration of power in the hands of shareholder services companies such as ISS and Glass Lewis, and the impact of passive/index funds that outsource shareholder voting decisions to them. Elon Musk’s tweet expressing his perspective on the compensation plan is also mentioned.

Tesla’s board of directors also outlines four specific points ISS made in its argument against a vote in favor of ratifying the package, arguing that the firm doesn’t fully understand what ratification means—alongside other points. Last week, ISS wrote that the pay package was “excessive, even given the company’s success,” noting that the firm is unsure if the award will “increase Musk’s focus on Tesla.”

The value of Musk’s compensation package was set and approved by shareholder votes in 2018, as part of a performance-based tranche system that would ultimately net him around $56 billion in Tesla shares for that time.

Last month, Tesla shared a website dedicated to showing investors how to vote, and encouraging them to vote yes on proposals three and four.

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