Proxy advisor ISS recommends Tesla shareholders oppose Elon Musk $1 trillion pay plan

Core Points - Institutional Shareholder Services (ISS) recommends Tesla investors vote against a pay plan for CEO Elon Musk that could grant him nearly $1 trillion in stock [1][2][3] - The proposed "mega performance equity award" is designed to retain Musk long-term and is contingent on achieving significant performance targets [2][3] - If approved, the plan could increase Musk's stake in Tesla by up to 12%, contingent on the company reaching a market cap of $8.5 trillion [3] Company Response - Tesla disagrees with ISS's recommendations, arguing that ISS has overlooked fundamental investment and governance principles [4] - The company urges shareholders to support the board's recommendations for all proposals in the upcoming proxy vote [4] Historical Context - ISS previously advised against Musk's 2018 pay package, which was valued at approximately $56 billion [5] - A Delaware Court ruled that the 2018 pay plan was improperly granted and must be rescinded due to lack of transparency [5][6] Voting Power - Musk holds at least 13.5% of Tesla's voting power, which may be sufficient to secure approval for the proposed pay package [8] - In September, Musk increased his ownership by purchasing an additional $1 billion in Tesla stock [8] Additional ISS Recommendations - ISS also recommends against granting Tesla's board authorization to invest in xAI, an AI company founded by Musk [9] - The firm suggests voting against the reinstatement of board member Ira Ehrenpreis, a close associate of Musk [9] Governance Changes - In May, Tesla amended its corporate bylaws to restrict shareholders' ability to sue for breaches of fiduciary duties, allowing only those with at least 3% ownership to initiate derivative actions [10]