Musk’s US$2.6B Tesla grant shouldn’t fly: ISS
Tesla Inc. investors should reject a plan to give chief executive Elon Musk an equity award valued at US$ 2.6 billion, the world’s largest proxy advisory firm said, echoing the recommendation of i ts biggest rival.
“Even the far- reaching performance goals do not j ustify the extraordinary grant magnitude,” Institutional Shareholder Services Inc. said in a report, a copy of which was obtained Thursday by Bloomberg. “Even when annualized, Musk’s p ay opportunity would dwarf that of nearly every CEO at the largest and most profitable public companies.”
Glass Lewis & Co., the second- biggest proxy adviser, also urged shareholders vote against the plan at Tes- la’s March 21 special meeting.
The recommendations from the firms, whose customers include the world’s largest institutional investors, could prove to be a hurdle for Tesla’s board, which needs majority shareholder approval to make the grant. The advisers’ reports may not be enough to sway Tesla biggest investors, who rely on their own research and have bet big on both Musk and his long-term vision.
The proposed award, mir- roring one Musk received in 2012, consists of 20.3 million stock options that will vest in 12 increments if marketvalue thresholds and other financial targets are met. Each tranche equals about one per cent of Tesla’s outstanding shares.
Skeptics have questioned whether more equity will motivate Musk, who’s already a billionaire and owns about 20 per cent of the Palo Alto, Calif.- based company. Supporters see the award as a way to ensure that his other ventures, including Space Exploration Technologies Corp. where he’s also CEO, won’ t take priority over electric-car firm Tesla.
Musk, 46, and his brother Kimbal Musk, who’s a Tesla director, won’t vote their shares on the grant.