Tesla Inc. investors should reject a plan to give Chief Executive Elon Musk an equity award valued at $2.6 billion, the world’s largest proxy advisory firm said, echoing the recommendation of its biggest rival.

“Even the far-reaching performance goals do not justify the extraordinary grant magnitude,” Institutional Shareholder Services Inc. said in a report, a copy of which was obtained Thursday by Bloomberg. “Even when annualized, Musk’s pay opportunity would dwarf that of nearly every CEO at the largest and most profitable public companies.”

Glass Lewis & Co., the second-biggest proxy advisor, also urged shareholders vote against the plan at Tesla’s March 21 special meeting.

The recommendations from the firms, whose customers include the world’s largest institutional investors, could be a hurdle for Tesla’s board, which cannot make the grant without majority shareholder approval. The advisory firms’ reports may not be enough to sway Tesla’s biggest investors, who rely on their own research and have bet big on Musk and his long-term vision.


Two of Tesla’s largest shareholders — Baillie Gifford & Co. and T. Rowe Price Group Inc. — indicated this week that they will vote in favor of the board’s proposal.

The proposed award, mirroring one Musk received in 2012, consists of 20.3 million stock options that will vest in 12 increments if market-value thresholds and other financial targets are met. Each tranche equals about 1% of Tesla’s outstanding shares.

Skeptics have questioned whether more equity would motivate Musk, who already is a billionaire and owns about 20% of the Palo Alto, Calif., company. Supporters see the award as a way to ensure that Musk’s other ventures — including Space Exploration Technologies Corp., or SpaceX, where he’s also CEO — won’t take priority over Tesla.

Musk, 46, and his brother Kimbal Musk, who is a Tesla director, won’t vote their shares on the grant.