Tesla's $2.6 billion payday for Elon Musk gets another 'no'
By Claudia Assis, MarketWatch
Musk's proposed compensation 'unparalleled,' ISS says
A second proxy adviser has come out against Tesla Inc.'s plan to award Chief Executive Elon Musk an estimated $2.6 billion in long-term compensation, calling it "unprecedented" and dilutive to shareholders.
Institutional Shareholder Services Inc., one of the two largest independent services meant to advise investors on crucial shareholder votes, said that the plan would be worth $260 million a year for Musk, leading to "massive costs" over the years for Tesla (TSLA) .
"Even when annualized, Musk's pay opportunity would dwarf that of nearly every CEO at the largest and most profitable public companies. This raises even more questions given that Musk does not devote his full-time attention to Tesla, and serves as the CEO of multiple other high-profile companies," ISS said.
Competitor proxy adviser Glass Lewis came out against the proposal on Monday, also calling it too costly and too dilutive. (http://www.marketwatch.com/story/teslas-26-billion-payday-for-elon-musk-faces-opposition-2018-03-05)
Tesla unveiled the 10-year plan last month (http://ir.tesla.com/releasedetail.cfm?ReleaseID=1054948), tying Musk's pay package to a series of benchmarks for Tesla, including the ultimate goal of reaching a market value of $650 billion. The company's market capitalization is around $55 billion.
The package has been hailed as a bid to keep Musk at the forefront of Tesla for years to come, and was modeled on an earlier program set up in 2012.
According to a Bloomberg News report (https://www.bloomberg.com/news/articles/2018-03-07/musk-s-2-6-billion-award-cheered-on-by-big-tesla-shareholders) this week, two of Tesla's largest shareholders, Baillie Gifford & Co. and T. Rowe Price Group Inc., support the plan.
Musk also leads Space Exploration Technologies Corp., or SpaceX; Neuralink, a company working on brain-to-computer technology; and spends some time with The Boring Co., a company that intends to build underground tunnels to ease traffic in major cities.
Related:Elon Musk's latest Boring Co. boast: A San Francisco Bay tunnel at 1/10th the cost (http://www.marketwatch.com/story/elon-musks-latest-boring-co-boast-a-san-francisco-bay-tunnel-at-110th-the-cost-2018-02-28)
Tesla has declined to comment on the proxy services' recommendations. The special meeting is set for 9 a.m. Pacific on March 21. The compensation plan is the only item on the agenda.
In 2016, ISS and Glass Lewis took different positions on Tesla's merger with SolarCity Corp., a deal shareholders eventually approved. At the time, Glass Lewis called the merger a "thinly veiled bailout," while ISS described it as "reasonable" and "necessary." (http://www.marketwatch.com/story/tesla-solarcity-deal-thinly-veiled-bailout-or-necessary-step-proxy-services-disagree-2016-11-04)
-Claudia Assis; 415-439-6400; AskNewswires@dowjones.com
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03-08-18 1716ETCopyright (c) 2018 Dow Jones & Company, Inc.