Multi-hyphenate business magnate Elon Musk is fine with offering Tesla shareholders personal tours to get them to vote on his multibillion-dollar pay package, but letting them listen to analysts? Now that he can’t tolerate.
In response to the proxy advisory firm Glass Lewis recommending shareholders reject Musk’s exorbitant compensation plan — which is valued as high as $56 billion — Tesla has put the firm on blast, Bloomberg reports, issuing a strongly worded letter to investors tearing apart its analysis.
Titled “What Glass Lewis Got Wrong About Tesla,” the letter claims that the firm “omits key considerations, uses faulty logic, and relies on speculation and hypotheticals,” per Bloomberg.
It’s also not above a little unabashed cheerleading of its vaunted CEO — and one wonders how much of a say he had in the letter’s messaging.
“Tesla created over $735 billion of market value for stockholders from 2018 to 2023 because Elon helped Tesla achieve performance targets that were regarded by many as extremely difficult or impossible,” it added (emphasis Tesla’s).
Musk’s compensation was originally approved by shareholders in 2018, but was blocked by a Delaware judge due to concerns over its “unfathomable” size and Musk’s “extensive” ties to the board.
It’s up for vote again at the upcoming shareholder meeting on June 13. Also on the agenda is the proposal to relocate Tesla’s state of incorporation from Delaware to Texas — a move undoubtedly motivated by the former state’s decision to block Musk’s payout.
Glass Lewis advised against the payment package back then, and it hasn’t changed its tune now. In a lengthy report, the firm warned that approving the compensation — which is doled out in stock options — would dilute existing shares in the company, as well as make Musk the largest stakeholder by a considerable margin.
Beyond that, it also questioned Musk’s “focus” on the company — given that he pursues other lucrative (and less lucrative) ventures — and the financial benefits of relocating Tesla to Texas.
“The excessive size of the award, both on a pure dollar basis and in terms of the dilutive effect upon exercise, remains very much top of mind,” the report said, as quoted by The Wall Street Journal. “The company’s provided rationale does little to combat these concerns given their proportionate magnitude.”
Tesla’s rebuke of the Glass Lewis letter confidently asserts that this is all hogwash. It also haughtily proclaims that Tesla is “one of the most successful enterprises of our time.”
But all that self-aggrandizing talk may not be enough to sway everyone in the Tesla camp. Musk is more polarizing than ever, and even though Tesla’s valuation is still astoundingly high, it’s suffering an absolute nightmare of a year, falling short of delivery goals last quarter and looking ever more inept with its shoddy Cybertruck.
Perhaps the automaker should have bigger priorities than ensuring Musk, whose net worth already exceeds $200 billion, gets dozens of billions more. Many, however — and that’s perhaps a dwindling many — believe he is inextricable from the company.
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