Tesla shareholders advised to reject Musk’s $56bn pay

Bengaluru — Proxy advisory firm Glass Lewis has urged Tesla shareholders to reject a $56bn pay package for CEO Elon Musk, which if passed would be the largest pay package for a CEO in corporate America.

A Glass Lewis report cited reasons like the “excessive size” of the pay deal, the dilutive effect upon exercise and the concentration of ownership. It also mentioned Musk’s “slate of extraordinarily time-consuming projects” which have expanded with his high-profile purchase of Twitter, now known as X.

The pay package was proposed by Tesla’s board of directors, which has repeatedly come under fire for its close ties with the billionaire. The package has no salary or cash bonus and sets rewards based on Tesla’s market value rising to as much as $650bn over the 10 years from 2018. The company is now valued at about $571.6bn, according to London Stock Exchange Group data.

In January, judge Kathaleen McCormick of Delaware’s court of chancery voided the original pay package. Musk then sought to move Tesla’s state of incorporation to Texas from Delaware.

Glass Lewis also criticised the proposed move to Texas as offering “uncertain benefits and additional risk” to shareholders. Tesla has urged shareholders to reaffirm their approval of the compensation.

In an interview this month, Tesla board chair Robyn Denholm told the Financial Times that Musk deserved the pay package because the company hit ambitious targets for revenue and its stock price.

Musk became Tesla CEO in 2008. In recent years, he has helped improve results, taking the company to a $15bn profit from a $2.2bn loss in 2018 and seven times more vehicles have been produced, according to an online campaign website, Vote Tesla.

The proxy adviser also recommended shareholders vote against the re-election of board member Kimbal Musk, the billionaire’s brother, while former 21st Century Fox CEO James Murdoch re-election was recommended.

Meanwhile, Musk recently told investors that his artificial intelligence start-up xAI was planning to build a supercomputer to power the next version of its AI chatbot Grok, The Information reported on Saturday citing a presentation to investors.

Musk said he wanted to get the proposed supercomputer running by mid-2025, as per the report, adding that xAI could partner with Oracle to develop the huge computer.

xAI could not be immediately reached for comment. Oracle did not respond to a request for comment.

When completed, the connected groups of chips — Nvidia’s flagship H100 graphics processing units (GPUs) — would be at least four times the size of the biggest GPU clusters that exist today.

The Information reported quoting Musk from a presentation made to investors in May. Nvidia’s H100 family of powerful GPUs dominate the data centre chip market for AI but can be hard to obtain due to high demand.

Musk founded xAI last year as a challenger to Microsoft-backed OpenAI and Alphabet’s Google. Musk also cofounded OpenAI.

Earlier this year, Musk said training the Grok 2 model took about 20,000 Nvidia H100 GPUs, adding that the Grok 3 model and beyond would require 100,000 Nvidia H100 chips. 

Reuters