A third major proxy advisor has weighed in on Elon Musk’s proposed $1 trillion Tesla pay package, giving it a partial thumbs up, but with some serious caveats.
Egan-Jones Proxy Services said it would recommend shareholders vote for the 2025 CEO Performance Award, but only under its “Wealth-Focus Policy,” which prioritizes shareholder returns and pay-for-performance alignment.
Under all its other policy frameworks, including ones focused on environmental, social, and governance (ESG) principles and broader corporate accountability, the firm urged investors to vote against the deal.
The split stance makes Egan-Jones the first major proxy firm to partly back Musk’s record-breaking compensation plan, setting it apart from Institutional Shareholder Services (ISS) and Glass Lewis, which both told Tesla shareholders to reject it outright.
A plan entirely built on performance
Under the wealth-focused framework, Egan-Jones argued Musk’s massive potential payout is justified because it’s fully tied to performance.
To unlock the full $1 trillion, Tesla would have to hit 12 operational milestones, including reaching an $8.5 trillion market capitalization, generating $400 billion in adjusted earnings, delivering 20 million vehicles, and reaching 10 million active Full Self-Driving subscriptions.
“If Mr. Musk fails to meet the specified milestones, he will receive nothing,” Egan-Jones wrote in its analysis.
“If he succeeds, both Mr. Musk and shareholders stand to benefit significantly,” it said.
The firm estimated that, if all targets are met, Tesla shareholders’ stock value could rise by about 800% over 10 years.
Governance and fairness concerns
But under its other policies — the Blended, ESG, Catholic, and Taft-Hartley policies — Egan-Jones flagged major governance and fairness risks.
These policies are designed for investors who value strong corporate oversight, equitable pay, and social responsibility alongside profits.
The firm cautioned that if Musk hits every target, his total ownership could climb to 28.8%, potentially giving him greater control over Tesla and reducing other shareholders’ influence on company decisions.
It also pointed to the massive gap between Musk’s potential earnings and employee pay, saying that if his proposed equity stake were shared evenly among Tesla’s 125,000 workers, each would receive about $8 million in stock.
Egan-Jones said that such a vast disparity could eventually hurt morale and pose long-term risks to Tesla’s workforce and reputation.
Those concerns echoed warnings from the other proxy firms.
ISS said Musk’s plan could undermine shareholder rights and governance standards, while Glass Lewis called it “excessively dilutive,” arguing Musk could earn billions in stock awards even if he hits just one of the 12 performance tranches.
Tesla fired back — and its chair stepped in
Tesla has fiercely disputed the proxy firms’ criticism, calling their analyses “misguided” and “robotic.”
In a series of posts on X this week, the company accused ISS and Glass Lewis of relying on “one-size-fits-all checklists” that ignore Tesla’s unique business model and history of defying industry norms.
Tesla Chair Robyn Denholm doubled down in an open letter to shareholders, which Tesla shared on X on Tuesday, urging them to “vote yes to robots, and reject robotic voting.”
She said ISS and Glass Lewis use a “simplistic, one-size-fits-all framework” that can’t assess a company as unconventional as Tesla, and argued that Musk’s 2025 play plan is meant to “supercharge Tesla’s next phase of exceptional growth and value creation.”
“Elon gets nothing unless shareholders enjoy exceptional investment returns,” Denholm wrote.
She dismissed concerns that the plan would shrink existing investors’ stakes, saying the package should be seen as “an investment, not dilution,” since shareholders would only give up value if Tesla’s market capitalization grows more than sevenfold.
Denholm closed by challenging investors to make a choice: “If you prefer that Tesla turn into just another car company mired in the ways of the past, then you should follow ISS and Glass Lewis.”
But if you believe in Tesla, “under the visionary leadership of Elon,” she added, “then you should vote with Tesla.”
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