Vanguard switched from anti stance to help push Musk’s pay package
A shift in opinion by Vanguard, Tesla’s largest outside investor, played a pivotal role in passing a record-setting pay arrangement for CEO Elon Musk during the company’s annual meeting on Thursday, according to Reuters.
The newswire reported that the index investing behemoth voted in favor of CEO Elon Musk’s $56 billion compensation package, citing Tesla’s performance as a key factor.
In a note reviewed by Reuters, Vanguard said it initially opposed Musk’s compensation package when it was first proposed and approved by shareholders in 2018. At that time, it was primarily concerned about the potential size of the pay relative to Tesla’s performance metrics.
Musk’s compensation package was invalidated by a Delaware judge in January, necessitating a new vote on the issue Thursday. Despite opposition from top proxy advisers and significant investors who said it was excessive, Vanguard voted in support of a massive payday for Musk.
“Given the strong alignment of executive pay with shareholder returns since 2018 and the benefits the board asserted related to the motivational value for the CEO in preserving the original deal,” Vanguard-advised funds voted for the compensation package, as per the note.
Vanguard held 232 million Tesla shares as of March 31, representing about 7 percent of the company, second only to Musk’s 13 percent stake. While some externally-managed Vanguard funds cast their votes separately, a Vanguard spokesman told Reuters that the note’s details applied to most of its funds.
Tesla leveraged its substantial retail shareholder base to endorse Musk’s pay and other proposals, including the re-election of two directors and the relocation of the company’s incorporation to Texas. Vanguard, managing assets
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