Tesla board responds to ISS in four-page shareholder letter

Credit: Tesla

Tesla’s board of directors has responded to one proxy advisory firm that recently urged its investors to vote against ratifying Elon Musk’s 2018 pay package, ahead of the upcoming annual shareholders meeting.

On Monday, Tesla’s board shared a four-page letter to shareholders on its website, detailing what it believes proxy advisory firm Institutional Shareholder Services (ISS) missed in its recent evaluation of the upcoming vote.

In it, the board writes that the firm was right to urge investors to vote in favor of proposal three, or moving incorporation from Delaware to Texas, adding that it missed important points in encouraging them to vote against proposal four, ratifying Musk’s previously approved $56 billion compensation package.


“Despite the recognition of the benefits of the 2018 CEO Performance Award to both Tesla and its stockholders, ISS ultimately reached the wrong conclusion about Proposal Four due to a technical misunderstanding around the Award,” writes the board.

Tesla’s board of directors also outlines four specific points ISS made in its argument against a vote in favor of ratifying the package, arguing that the firm doesn’t fully understand what ratification means—alongside other points.

The letter also includes a recent post on X from Musk, in which he said that the compensation plan would let the CEO “sell enough stock to pay the taxes,”  the rest of which would need to be held for five years.

Last week, ISS wrote that the pay package was “excessive, even given the company’s success,” noting that the firm is unsure if the award will “increase Musk’s focus on Tesla.”

The value of Musk’s compensation package was set and approved by shareholder votes in 2018, as part of a performance-based tranche system that would ultimately net him around $56 billion in Tesla shares for that time. The vote to ratify the plan comes after it was struck down and effectively voided by Delaware Judge Kathaleen McCormick in January.

Tesla shareholders have until June 13 to vote their shares on these and other proposals, and the company has recently used multiple avenues to encourage investors to vote yes on proposals three and four. Other firms have been divided on the vote, with some, such as Glass Lewis, encouraging shareholders to vote against the proposals, while others have urged stockholders to vote in favor of them—in accordance with board recommendations.

Last month, Tesla shared a website dedicated to showing investors how to vote, and encouraging them to vote yes on proposals three and four. You can visit that site here.

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Tesla board responds to ISS in four-page shareholder letter
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