Tesla is seeking shareholders’ re-approval for CEO Elon Musk’s hefty $56 billion compensation plan from 2018, which was previously rejected by a Delaware judge in January for being excessive and unjustified.
Musk’s compensation, tied to Tesla’s market value increase to $650 billion over the next decade, currently stands at over $500 billion, according to LSEG data, excluding salary or cash bonuses.
The rejection from Delaware Court of Chancery’s Kathleen McCormick criticized the board’s decision, deeming the compensation “incalculable” and unfair to shareholders.
Tesla’s move for a fresh shareholder vote appears to bolster support for Musk’s pay package and challenge the court’s ruling, which disapproved the largest corporate pay package in America.
In response to the court’s decision, board chair Robin Denholm expressed disagreement, stating that the ruling did not conform to corporate law principles.
In 2023, Musk’s compensation was recorded as $0, as he does not draw a salary but is compensated through stock options. The court case also mentioned Musk’s involvement in an attempt to disrupt Twitter Inc.’s acquisition deal.
Tesla is suggesting a re-vote on the original 2018 compensation package, contemplating legal considerations, as well as seeking approval from shareholders to relocate its state of incorporation from Delaware to Texas.
Ahead of the market opening, shares of the leading automaker rallied by 1%.
This year has been challenging for Tesla, with reports of underperforming against market expectations and observing its first decline in deliveries in four years, prompting a workforce reduction of 14,000 employees. The broader electric vehicle industry has also experienced a slowdown, with major players like Ford revising their plans.
Meanwhile, Apple scaled back its self-driving electric car project, leading to layoffs, indicating a shifting landscape in the electric vehicle sector.
Source: www.theguardian.com
