Elon Musk Criticizes Proxy Firms Over Opposition to Tesla Compensation Plan

During Tesla's recent earnings call, CEO Elon Musk criticized proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis for opposing his proposed $1 trillion compensation package. Musk referred to these firms as "corporate terrorists" and accused them of voting along "random political lines unrelated to shareholder interests."

Musk emphasized the importance of maintaining sufficient voting power to guide Tesla's future endeavors in artificial intelligence, robotaxis, and humanoid robots. He stated that he requires about "mid-20s" percent voting power to have a strong influence at Tesla while still being removable if necessary.

The proposed compensation plan, which would be the largest in corporate history, aims to award Musk up to $1 trillion in stock if he meets specific performance targets. These targets include increasing Tesla's market value to $8.5 trillion and achieving milestones such as selling 12 million cars, launching one million robotaxis, and producing one million humanoid robots.

Proxy advisory firms ISS and Glass Lewis have recommended that shareholders vote against the compensation package, citing concerns over its size and potential dilution of shareholder value. Glass Lewis expressed that the plan could lead to a decrease in shareholder value and raised issues with the proposed payment terms.

In response, Tesla's Board Chair Robyn Denholm defended the compensation plan, criticizing the proxy firms' "one-size-fits-all" approach. She argued that their models fail to account for Tesla's unique business model and track record, emphasizing that the plan aligns Musk's incentives with long-term shareholder interests.

The shareholder vote on Musk's compensation package is scheduled for November 6. The outcome will determine whether Musk's stake in Tesla could increase from 13% to nearly 29%, significantly enhancing his control over the company.