Proxy advisory firm Institutional Shareholder Services on Thursday recommended Tesla Inc stockholders reject a multi-billion-dollar, 10-year pay package for Chief Executive Elon Musk, saying the “unprecedented” award was too rich.
The compensation arrangement announced in January involves no salary or cash bonus yet sets up rewards for Musk based in part on electric vehicle maker Tesla’s market value rising to $650 billion over the next 10 years, through around $56 billion currently.
Palo Alto, California based Tesla will be under pressure as its much-anticipated product 3 sedan has already missed several key production targets.
ISS calculated the award was worth $3.7 billion on the grant date, compared with the $2.6 billion projected by Tesla. the item joins advisory firm Glass Lewis in recommending against the proposal.
Tesla shareholders are due to vote on March 21, as well as the company needs majority approval for the proposal to go through. The company declined to comment.
The award “locks in unprecedented high pay opportunities for the next decade, as well as seemingly limits the board’s ability to meaningfully adjust future pay levels from the event of unforeseen events or modifications in either performance or strategic focus,” ISS said on Thursday.
The advisory firm also flagged that will a big part of the award could be earned even if Tesla, which reported its worst ever loss from the fourth quarter, does not sustainably make profits from the future.