(Reuters) – Tesla on Monday defended a proposal to ratify CEO Elon Musk’s $56 billion pay package and said a new compensation would be costlier, days after a top proxy advisory firm recommended shareholders to vote against the proposal.
The electric-vehicle maker argued that his pay package – one of the biggest in corporate America – motivated Musk to create “tremendous value” for shareholders.
This was in response to Institutional Shareholder Services (ISS) last week calling the pay “excessive”, while raising concern over Tesla offering its shareholders an “all or nothing” option ahead of a vote at their annual meeting on June 13.
The compensation, set and approved in 2018 by shareholders, rewards based on Tesla’s market value and operational milestones.
But a Delaware judge voided it in January, and Tesla has since then sought to move its state of incorporation to Texas.
The company said in its Monday filing that shareholder recommendation by ISS is based on a “technical misunderstanding” and that the advisory firm recognized the company’s strong performance under Musk.
Under Delaware law, ratification means that the proposal is either accepted or rejected in its entirety, Tesla said, adding that a new pay package would be costlier to the shareholders.
“A functionally equivalent grant of new options could result in an accounting charge of more than $25 billion, compared to the $2.3 billion charge originally recognized for the 2018 award,” it said.
“A deal should be a deal. He delivered on his end of the bargain. It’s time for us to deliver on ours.”
(Reporting by Yuvraj Malik in Bengaluru; Editing by Arun Koyyur)
