Battle over Elon Musk's $56 billion pay escalates. Tesla shareholders told to do this

Elon Musk's pay package was proposed by Tesla's board of directors which has come under fire for its close ties with the billionaire.

Tesla shareholders have been urged to reject a $56 billion pay package for company's CEO Elon Musk by proxy advisory firm Glass Lewis. If the pay package is passed, Elon Musk will have the largest pay package for a CEO in corporate America. The firm cited reasons like the "excessive size" of the pay deal, the dilutive effect upon exercise and the concentration of ownership for denying the pay package. It also said that Elon Musk's "slate of extraordinarily time-consuming projects" which increased after purchase of Twitter, now known as X, could be an impediment.

Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of X looks on during the Milken Conference 2024 Global Conference Sessions at The Beverly Hilton in Beverly Hills, California. (Reuters)

What has Tesla said on Elon Musk's pay?

While Tesla has urged shareholders to reaffirm their approval of the compensation, Tesla's board chair Robyn Denholm told the Financial Times that Elon Musk deserves the pay package as the company has achieved its ambitious targets.

What is included in Elon Musk's pay package?

Elon Musk's pay package was proposed by Tesla's board of directors which has come under fire for its close ties with the billionaire. The package has no salary or cash bonus but sets rewards based on Tesla's market value rising to as much as $650 billion over the 10 years from 2018.

This package was voided in January by Judge Kathaleen McCormick of Delaware's Court of Chancery after which Elon Musk sought to move Tesla's state of incorporation to Texas from Delaware.

Elon Musk became Tesla CEO in 2008 and took the company to a $15 billion profit from a $2.2 billion loss in 2018, according to an online campaign website Vote Tesla.