Top proxy advisor ISS recommends against Elon Musk's $56 billion Tesla pay package

Top proxy advisor Institutional Shareholder Services on Friday recommended Tesla shareholders vote against the reapproval of CEO Elon Musk's $56 billion pay package and withhold their support from the reelection of News Corp. scion James Murdoch to the automaker's board.

Tesla's shareholder meeting is scheduled for June 13.

The report, a copy of which was obtained by CNBC, comes after the other influential proxy advisor service, Glass Lewis, also recommended shareholders vote against Musk's pay package. Tesla's board is seeking shareholder approval to reinstate Musk's pay after a Delaware court voided the package earlier this year.

ISS said "cautionary" shareholder support was merited for Tesla's plans to reincorporate out of Delaware and into Texas, although the proxy advisor also warned that there are concerns over how Tesla's board decided to reincorporate and over the "unknown" nature of Texas' business law framework.

The proxy advisor recommended support for some shareholder proposals that Tesla management opposes, including one that would declassify Tesla's board. A classified or staggered board is considered by some advisors to be an effective defense against a takeover bid.

"At a mega-cap company like Tesla, what is perhaps even more relevant to shareholders is that a staggered board can hinder shareholders from holding directors accountable for poor responsiveness," ISS said of its support for the declassification proposal.

Tesla has been courting shareholder support in both time-tested and novel ways. The company engaged communications firm FGS Global and proxy solicitor Innisfree M&A to win votes, and has bolstered apparent grassroots support from its large network of social media influencers. The company also