• Tesla rebuked Glass Lewis for urging shareholders to reject Elon Musk's $55 billion pay plan.
  • Tesla said the firm demonstrated faulty reasoning in a letter to shareholders.
  • Tesla is seeking approval from shareholders for the pay plan and moving its incorporation to Texas.

Tesla was quick to fire back at Glass Lewis after the advisory firm encouraged shareholders to vote against the company's $55 billion compensation plan for Elon Musk.

In a letter to shareholders on Wednesday, Tesla slammed Glass Lewis, accusing the firm of "scaremongering" and faulty reasoning.

"In its report, Glass Lewis omits key consideration, uses faulty logic, and relies on speculation and hypotheticals," Tesla wrote in a letter to investors titled "What Glass Lewis Got Wrong About Tesla."

The automaker hit back at multiple claims presented in Glass Lewis' 71-page report that was published Saturday and first reported by Bloomberg. Glass Lewis called Musk's pay package — which was originally approved in 2018 but struck down by a Delaware judge in January — "excessive" and advised investors to reject Tesla's bid to move its incorporation from Delaware to Texas.

In response, Tesla called the firm's claim that rescinding the award is acceptable "absurd." The company called Glass Lewis' concerns regarding moving the company's state of incorporation to Texas "scaremongering" and took issue with the firm's worries about Musk's commitment level to the company, saying its CEO created significant market value for investors between 2018 and 2023.

"Glass Lewis may believe that Elon should have done so with more 'focus,' but the fact is that Tesla's performance speaks for itself," Tesla wrote. "Stockholders should care enormously about value creation (which Glass Lewis inexplicably ignores), and not about whether Elon's perceived 'focus' was strong enough."

A spokesperson for Glass Lewis did not immediately respond to Business Insider's request for comment ahead of publication.

Tesla appears to be facing mounting pushback from institutional investors. On Wednesday, the CEO of CalPERS, the largest public pension fund in the US, said the fund plans to vote against the pay package. And earlier in May, a group of shareholders filed a letter with the Securities and Exchange Commission calling for investors to vote against both Musk's pay package and the proposal to reelect James Murdoch and Kimbal Musk.

For its part, Tesla has been pulling out all the stops to promote the proposal and encourage shareholders to participate. On Wednesday, the company began offering investors the chance for a tour of Tesla's Texas gigafactory alongside Musk in exchange for proof they'd voted ahead of the annual shareholder meeting. Tesla has also argued the compensation plan is "critical to the future success of Tesla" and has even paid for a handful of advertisements promoting the pay plan.

A spokesperson for Tesla did not immediately respond to a request for comment.

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