Proxy advisor recommends Tesla shareholders to vote for ratification of Musk’s 2018 pay plan

Tesla (NASDAQ:TSLA) shareholders have a chance to ratify Elon Musk’s 2018 CEO Performance Award this coming 2024 Annual Stockholders’ Meeting. And as far as proxy advisor Egan-Jones is concerned, Tesla shareholders should vote “Yes” to reinstate Elon Musk’s compensation plan. 

In a recommendation released earlier this week, Egan-Jones noted that Musk’s high-risk, high-reward pay package is critical in maintaining the CEO’s motivation. The proxy advisor firm also noted that while Musk’s compensation is high, it also emphasizes Musk’s contributions to Tesla’s success. 

“Egan-Jones believes the continuation of this compensation plan is critical for maintaining Musk’s leadership and motivation, which are essential for Tesla’s sustained growth and innovation. The firm acknowledges the high compensation level but emphasizes the exceptional performance and unique contributions of Musk to Tesla’s success,” the firm noted. 

While Tesla stock has fallen from its all-time highs, the company has added about $500 billion to its market cap since Elon Musk’s 2018 compensation plan was approved, as noted in a Barron’s report. This effectively made Tesla into the world’s most valuable carmaker by valuation. Tesla’s vehicle deliveries have seen a notable rise as well, from 255,000 in 2018 to about 1.8 million in 2023. 

The targets outlined in Musk’s 2018 CEO Performance Award have been fully achieved, though some TSLA investors, such as Glass Lewis, have recommended that shareholders should vote “No” to the ratification of the CEO’s compensation plan. Wedbush analyst Dan Ives, for his part, however, has noted that Musk’s pay package would likely still be ratified at the 2024 Annual Stockholders’ Meeting. 

“A yes vote is in the cards so Tesla shareholders can move on from this Delaware disaster. The Musk 2018 Compensation issue has been an overhang on the stock and we believe on June 13 this finally gets resolved,” Ives noted. 

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