DETROIT (AP) — A second shareholder advisory firm has come out against reinstating a pay package for Tesla CEO Elon Musk that was voided earlier this year by a Delaware judge.
ISS late Thursday joined Glass Lewis in recommending against the package, recently valued by the company at $44.9 billion but in January had a value of about $56 billion.
Shareholders of the electric vehicle and solar panel company are voting on the package, with the results to be tabulated at Tesla's June 13 annual meeting.
ISS said in its recommendations on Tesla's proxy voting items that Musk's stock-based package was outsized when it was approved by shareholders in 2018, and it failed to accomplish board objectives voiced at that time.
The firm said that Tesla met the pay package’s performance objectives, and it recognized the company's substantial growth in size and profitability. But concerns about Musk spending too much time on other ventures that were raised in 2018 and since then have not been sufficiently addressed, ISS said.
“The grant, in many ways, failed to achieve the board’s other original objectives of focusing CEO Musk on the interests of Tesla shareholders, as opposed to other business endeavors, and aligning his financial interests more closely with those of Tesla stockholders,” ISS wrote.
Also, future concerns remain unaddressed, including a lack of clarity on Musk's future compensation and the potential for his pay to significantly dilute shareholder value, ISS wrote.
Musk plays big roles in his other ventures including SpaceX, Neuralink and the Boring Company. Last year he bought social media platform X and formed an artificial intelligence unit called xAI.
Last week the other prominent proxy advisory firm, Glass Lewis, also recommended against reinstating Musk's 2018 compensation package. The firm said the package would dilute shareholders' value by about 8.7%. The rationale for the package “does not in our view adequately consider dilution and its long-lasting effects on disinterested shareholders,” Glass Lewis wrote.
But in a proxy filing, Tesla said that Glass Lewis failed to consider that the 2018 award incentivized Musk to create over $735 billion in value for shareholders in the six years since it was approved.
“Tesla is one of the most successful enterprises of our time,” the filing said. “We have revolutionized the automotive market and become the first vertically integrated sustainable energy company."
Tesla is struggling with falling global sales, slowing electric vehicle demand, an aging model lineup and a stock price that has tumbled about 30% this year.
