(Reuters) – Tesla (NASDAQ:) on Monday defended a proposal to ratify CEO Elon Musk’s $56 billion pay package, saying new compensation would be more expensive, days after a top proxy advisory firm recommended shareholders oppose the proposal to vote.
The electric vehicle maker argued that its compensation package – one of the largest in corporate America – motivated Musk to create “tremendous value” for shareholders.
This was in response to Institutional Shareholder Services (ISS) calling the pay “excessive” last week, while raising concerns that Tesla would offer its shareholders an “all or nothing” option ahead of a vote on their annual meeting on June 13.
The compensation, which was set and approved by shareholders in 2018, rewards based on Tesla’s market value and operating milestones.
But a judge in Delaware invalidated it in January, and Tesla has since tried to move its state of incorporation to Texas.
The company said in its filing Monday that ISS’s shareholder recommendation is based on a “technical misunderstanding” and that the consulting firm recognized the company’s strong performance under Musk.
Under Delaware law, ratification means either accepting or rejecting the proposal in its entirety, Tesla said, adding that a new pay package would be more expensive for shareholders.
“A functionally equivalent grant of new options could result in accounting costs of more than $25 billion, compared to the $2.3 billion originally granted for the 2018 award,” the report said.
‘A deal has to be a deal. He has kept his promise. It’s time for us to live up to ours.”
