Tesla wants shareholders to reinstate $56 billion pay package for Musk rejected by Delaware judge

AUSTIN, Texas – Tesla will ask shareholders to approve the reinstatement of a $56 billion compensation package for CEO Elon Musk, which a Delaware judge rejected earlier this year, and move the electric car manufacturer’s headquarters from Delaware to Texas.

In a statement with federal regulators early Wednesday, the business stated that shareholders will vote on both measures at its annual meeting on June 13.

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Tesla wants shareholders to reinstate $56 billion pay package for Musk rejected by Delaware judge

The Tesla board of directors offered Musk an unprecedented compensation plan that could be worth $55.8 billion over ten years starting in 2018, but Chancellor Kathaleen St. Jude McCormick ruled in January that Musk is not eligible for it.

Five years ago, a Tesla shareholder lawsuit argued that the pay package should be void because Musk dictated it and forged agreements with directors who weren’t impartial to him.

Musk announced a month after the judge’s decision that he would try to relocate Tesla’s corporate listing to Texas, where he has already relocated the company’s headquarters.

Almost immediately after the judge’s order, Musk moved Neuralink, his privately held brain implant company, from Delaware to Nevada.

Tesla met all of the operational and stock value benchmarks outlined in a 2018 CEO pay package, according to Chairperson Robyn Denholm in a letter to shareholders this week. She also stated that Musk has met the automaker’s growth expectations.

“Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years, which has helped to generate significant growth and stockholder value,” Denholm said. “That strikes us — and the many stockholders from whom we already have heard — as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it.”

According to a regulatory filing, Tesla delivered 1.8 million electric vehicles worldwide in 2023. However, the value of its shares has dropped sharply this year as sales of electric vehicles fall.

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Tesla wants shareholders to reinstate $56 billion pay package for Musk rejected by Delaware judge

Future growth is still being determined, and it may be difficult to persuade shareholders to support a large pay package in a market where competition has increased globally, and demand for electric vehicle sales is declining. Shareholders will also be asked to submit a nonbinding advisory vote on future CEO pay.

Tesla’s stock has lost over one-third of its worth this year as dramatic price cuts have yet to attract new purchasers. The business said it shipped 386,810 automobiles from January to March, about 9% fewer than last year.

Musk’s package was valued at more than $55.8 billion at the time of the Delaware court verdict, but the court may have cost the erratic CEO more than $10 billion due to the company’s stock decline this year. According to the report, Musk’s 2018 remuneration totaled $44.9 billion at the close of trading on April 12.

Since last year, Tesla has reduced prices by up to $20,000 on some models. The price decreases caused the prices of used electric vehicles to fall, reducing Tesla’s profit margins.

Tesla announced this week that it would lay off nearly 10% of its workforce, or approximately 14,000 individuals.

Following receipt of a report from a special committee under the direction of one board member, Kathleen Wilson-Thompson, Tesla’s board stated in the filing that it sought shareholder approval of Musk’s 2018 compensation package.

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Tesla wants shareholders to reinstate $56 billion pay package for Musk rejected by Delaware judge

The board stated that if a significant vote is cast against future executive pay packages, “we will consider our stockholders’ concerns, and the compensation committee will evaluate whether any actions are necessary to address those concerns.”

Tesla Inc. shares, which fell another 8% this week, were marginally down in trade shortly after Wednesday’s opening bell.

SOURCE – (AP)