Musk's compensation plan opposed by Glass Lewis, who is Glass Lewis?

On May 25, the proxy advisory firm Glass Lewis stated that it has urged Tesla shareholders to reject Elon Musk's $56 billion package, which is the highest currently for a CEO in American corporations. The report cites a variety of reasons, such as the remuneration agreement being "too large", the dilution effect on exercising rights and concentration of ownership, and mentions that Musk has a series of extremely time-consuming projects that continue to expand with the acquisition of Twitter (now known as X).

According to public information, the Toronto-based Peloton Capital Management (PCM) and its co-founder Stephen Smith control Glass Lewis, this is a private equity firm that acquired Glass Lewis in March 2021. Glass Lewis is a corporate governance and proxy voting adviser, helping institutional investors vote at annual shareholder meetings. This recommendation may affect the voting of large institutional investors at the Tesla Annual Shareholders Meeting on June 13. If the compensation proposal is rejected, the CEO may also fulfill the threat to develop products outside of Tesla.

The compensation plan was proposed by the Tesla Board of Directors. The plan does not include salaries or cash bonuses, but awards set based on Tesla's market value rising to $650 billion within 10 years starting from 2018. In January this year, the Court of Chancery declared the original compensation plan invalid, and Musk subsequently sought to relocate Tesla's registered office from Delaware to Texas. Glass Lewis criticized the proposal to relocate the registered office to Texas, saying it would bring "uncertain interests and additional risks" to shareholders.

During an interview earlier this month, Tesla's chairman of the board, Robyn Denholm, said that Musk deserves this salary because he has helped the company achieve revenue and share price goals. And he became CEO of Tesla in 2008. According to the online campaign site Vote Tesla, he has helped the company improve its performance in recent years, turning the company from a loss of $2.2 billion in 2018 to a profit of $15 billion, with car production increasing sevenfold.