Prime proxy advisor Institutional Shareholder Providers on Friday beneficial Tesla shareholders vote in opposition to the reapproval of CEO Elon Musk’s $56 billion pay package deal and withhold their help from the reelection of Information Corp. scion James Murdoch to the automaker’s board.

Tesla’s shareholder assembly is scheduled for June 13.

The report, a duplicate of which was obtained by CNBC, comes after the opposite influential proxy advisor service, Glass Lewis, additionally beneficial shareholders vote in opposition to Musk’s pay package deal. Tesla’s board is looking for shareholder approval to reinstate Musk’s pay after a Delaware courtroom voided the package deal earlier this 12 months.

ISS mentioned “cautionary” shareholder help was merited for Tesla’s plans to reincorporate out of Delaware and into Texas, though the proxy advisor additionally warned that there are issues over how Tesla’s board determined to reincorporate and over the “unknown” nature of Texas’ enterprise legislation framework.

The proxy advisor beneficial help for some shareholder proposals that Tesla administration opposes, together with one that may declassify Tesla’s board. A categorised or staggered board is taken into account by some advisors to be an efficient protection in opposition to a takeover bid.

“At a mega-cap firm like Tesla, what is probably much more related to shareholders is {that a} staggered board can hinder shareholders from holding administrators accountable for poor responsiveness,” ISS mentioned of its help for the declassification proposal.

Tesla has been courting shareholder help in each time-tested and novel methods. The corporate engaged communications agency FGS International and proxy solicitor Innisfree M&A to win votes, and has bolstered obvious grassroots help from its massive community of social media influencers. The corporate additionally launched a web site, VoteTesla.com, and has provided shareholders the prospect to win a tour of Tesla’s Gigafactory facility in Austin, Texas.

Tesla seeks shareholder approval for Musk’s payday and concurrently to reincorporate out of Delaware and into Texas. The corporate has characterised the Delaware Chancery Courtroom ruling that overturned Musk’s inventory package deal as unfriendly to shareholders, noting the worth that Musk has created for traders.

“During the last a number of years it has develop into clear that Delaware is not the correct jurisdiction for us,” Tesla Chair Robyn Denholm mentioned in a letter to shareholders earlier this week.

Tesla has adopted techniques different firms have utilized in contested shareholder conferences, whipping votes and launching a concerted public relations effort to win help. Whereas Tesla shouldn’t be going through any form of significant organized opposition to its efforts to reincorporate or reapprove Musk’s pay package deal, some shareholders have come out in opposition to it. Billionaire Leo Koguan has repeatedly mentioned he’ll vote in opposition to the package deal. Koguan says he owns round 0.75% of Tesla shares, value round $4.9 billion.

ISS and its smaller peer Glass Lewis are an necessary consider how shareholders determine to forged their votes at annual elections. Their suggestions are intently watched in contested conditions however should not definitive calls. Nonetheless, they’ve developed a fame for being necessary bellwethers and search to advocate for shareholders.

They’ve additionally been the direct goal of Musk’s ire. Earlier this 12 months on an earnings name, he in contrast ISS with the terrorist group ISIL, also referred to as ISIS. Musk additionally mentioned they “successfully management the inventory market” on X in 2023, saying they’d outsize affect over so-called passive or institutional shareholders.

Institutional shareholders like BlackRock and Vanguard, nevertheless, don’t at all times vote with ISS suggestions. Whereas voting selections are typically not disclosed till effectively after a shareholder assembly, these institutional shareholders have due diligence groups that assist them determine find out how to forged the hundreds of thousands of shares they handle on behalf of their traders.

ISS in its report mentioned its prior issues over the pay package deal, which dates to 2018, had not been mitigated and that it “stays extreme,” noting that “the board has successfully solely provided shareholders an ‘all or nothing’ choice on this vote.”

The proxy advisor alluded to Musk’s myriad different enterprise ventures reminiscent of social media platform X, his AI startup xAI and SpaceX, as another excuse why Tesla shareholders shouldn’t help the pay package deal.

“The grant, in some ways, failed to realize the board’s different authentic goals of focusing CEO Musk on the pursuits of Tesla shareholders, versus different enterprise endeavors, and aligning his monetary pursuits extra intently with these of Tesla stockholders,” ISS mentioned.

Tesla didn’t instantly reply to a request for remark.