1. Tesla (NASDAQ:TSLA) CEO Elon Musk Could Make a Killing From His Stock Options

    Tesla (NASDAQ:TSLA) CEO Elon Musk Could Make a Killing From His Stock Options

    One of two major U.S. proxy advisory firms, Glass Lewis, has recommended shareholders of electric car marker and solar panel installer Tesla Inc. ( TSLA ) vote against a proposal to grant CEO Elon Musk performance-based stock options the company says are worth about $2.6 billion at Tesla's annual meeting set for March 21. Unlike a typical Say for Pay vote, shareholders' votes will be binding for the company, and notably, Elon Musk recused his roughly 20% stake from voting...

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    1. Although we do not consider the practice of providing front-loaded grants to be inherently problematic, shareholders should generally be wary of this approach to granting.
    2. Total compensation for CEOs of blue-chip US companies is almost universally only a small fraction of this annualized figure even while it is considerably less at-risk (and risky), with salary a guaranteed income and annual bonus targets set based on goals considered by to be achievable.
    3. To the board's credit, the incentive design is in theory quite well balanced in precluding a number of otherwise plausible perverse incentives and inappropriate payout scenarios, as well as in rewarding a particularly accomplished individual for transformative achievements.
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