’Using faulty logic’: Tesla blasts Glass Lewis, urges shareholders to back Elon Musk’s $56 billion pay package

In a recent letter to shareholders, Tesla Inc. has strongly criticized proxy adviser Glass Lewis Inc., following the adviser's recommendation to reject a proposed $56 billion pay package for CEO Elon Musk, Bloomberg reported.

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In a letter titled “What Glass Lewis Got Wrong About Tesla”, the electric vehicle maker accused the adviser of omitting key considerations, using faulty logic, and relying on speculation and hypotheticals. 

Bloomberg reported that Tesla urged shareholders to disregard Glass Lewis's advice and vote in favour of Musk's compensation package and a proposal to reincorporate the company in Texas rather than Delaware.

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The letter, published Thursday, stated, "Tesla is one of the most successful enterprises of our time. We have revolutionized the automotive market."

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As Tesla's annual meeting on June 13 approaches, the company's board is working to rally shareholder support, particularly for Musk's controversial compensation package. Initially crafted and supported by most shareholders in 2018, the pay deal was nullified by a Delaware judge earlier this year. The judge ruled that the board had not been transparent enough with investors and that the deal was not in their best interest.

Glass Lewis recently labelled the payout as "excessive" and criticised Musk for managing too many ventures simultaneously. In response, Tesla asserted that the compensation agreement had motivated Musk to achieve "extraordinary growth."

“Stockholders should care enormously about value creation,” the Tesla letter argued. "And not about whether Elon’s perceived ‘focus’ was strong enough."

Musk has long criticised firms like Glass Lewis and Institutional Shareholder Services Inc., another influential proxy advisory firm. In January 2023, Musk posted on social media that these companies held too much power, “because so much of the market is passive/index funds, which outsource shareholder voting decisions to them”.

“ISS and Glass Lewis effectively control the stock market,” Musk wrote.

Additionally, Musk took to social media on Thursday to criticize Calpers, the largest state public pension fund in the US, after its CEO announced plans to vote against the pay package. Musk accused Calpers of "breaking their word" in a post on X.

(With Inputs from Bloomberg)