Tesla Inc.’s Board of Directors Chair, Robyn Denholm, has criticized proxy advisory firms like International Shareholder Services (ISS) and Glass Lewis for opposing CEO Elon Musk’s new compensation award. The award, which could make Musk a trillionaire, has sparked controversy among investors and experts.
Defense of Musk’s Pay Package
In a recent post on the social media platform X, Denholm penned a letter to investors defending Musk’s pay package and calling the recommendations of the proxy advisory firms “misguided.” She argued that ISS and Glass Lewis use a “simplistic, one-size-fits-all framework” to evaluate companies, which is not suitable for a innovative company like Tesla that challenges the status quo.
Denholm encouraged investors to ignore the advice of ISS and Glass Lewis and vote with the Board’s recommendations on all proposals. She addressed queries about the package, stating that Musk would be paid nothing unless shareholders enjoy exceptional investment returns, and that Musk would secure additional voting rights if he delivers on bold market capitalization and operational goals.
Addressing Concerns
Denholm also addressed concerns about the relatively easy milestones in the package, which could give Musk billions of dollars even if he fails to reach all the goals. She stated that Musk would need to lead Tesla to $400 billion in Adjusted EBITDA, which means growing the company’s current Adjusted EBITDA by approximately 26 times, emphasizing that there are no easy milestones.
Expert Opinions
Experts have also weighed in on the pay package row. Ross Gerber, co-founder of Gerber Kawasaki, criticized the compensation award, calling it “insanity” and questioning the independence of Tesla’s Board. On the other hand, Cathie Wood, CEO of ARK Invest and Tesla Bull, defended the compensation award and criticized ISS for its opposition to the package.
Gary Black, managing director of Future Fund LLC, and Dan Ives, investor at Wedbush Securities, both expect the new pay package to receive approval from Tesla’s shareholders. The package has sparked a heated debate among investors and experts, with some arguing that it is excessive and others seeing it as a necessary incentive for Musk’s leadership.
Conclusion
The controversy surrounding Musk’s compensation award highlights the challenges of evaluating executive pay packages, particularly for innovative companies like Tesla. As the company continues to push the boundaries of the electric vehicle industry, investors will be watching closely to see how the pay package affects Musk’s leadership and the company’s performance.
Key Takeaways
- Tesla Chair Robyn Denholm defends Elon Musk’s $1 trillion compensation award
- Proxy advisory firms ISS and Glass Lewis oppose the pay package
- Experts weigh in on the controversy, with some criticizing the award and others defending it
- The pay package has sparked a heated debate among investors and experts
- The outcome of the shareholder vote will be closely watched to see how it affects Musk’s leadership and the company’s performance.