According to the judge’s ruling in January
Shareholders should vote on Musk’s mega salary
April 17, 2024, 5:41 p.m
Listen to article
This audio version was artificially generated. More info | Send feedback
In January, a judge stopped Tesla boss Elon Musk’s $56 billion pay package. The electrical manufacturer does not want to accept the verdict. Instead, the shareholders should now decide. In addition, the shareholders should agree to the relocation of the group to Texas.
The US electric car manufacturer Tesla wants to have its shareholders approve CEO Elon Musk’s $56 billion salary package, which was overturned by a court in Delaware. “When legally advisable, we will simply subject the original 2018 package to a new reconciliation,” Tesla said in a regulatory notice.
At the end of January, a judge in Delaware described Musk’s compensation package based on stock options as incredibly high and declared it invalid. She decided at the time that Musk and the Tesla board had the burden of proving that the pay package was fair. But they didn’t comply. An appeal is possible against the verdict.
“We disagree with the Delaware court’s decision,” wrote Board Chairman Robyn Denholm. Tesla argued in its filing that the compensation package was fair for shareholders because the value of their shares had risen sharply since 2018. Four of the ten largest institutional Tesla shareholders also contacted him to complain about the Delaware ruling, the investor letter said.
According to the 2018 plan, Musk could get stock options with a maximum value of up to $55.8 billion in twelve steps if Tesla’s stock market value and business figures grew with certain minimum values. The agreement’s targets seemed extremely steep in 2018. Above all, one requirement was that Tesla’s market value rose from around $50 billion to around $650 billion. But investors’ euphoria over the success of the Model 3 and Model Y compact cars made it possible: at its peak, Tesla was worth more than a trillion dollars.
The case was heard in Delaware because Tesla and many other large companies are based there for tax purposes. Musk responded to the decision in January with a tweet in which he wrote: “Never start your company in the state of Delaware.” “I recommend forming a company in Nevada or Texas if you prefer shareholders to decide matters,” he wrote on X at the time. After 87 percent voted yes in a vote, Musk said he ” “will immediately hold a shareholder vote to relocate the company’s headquarters to Texas.” The Tesla shareholders should now also agree to the relocation of the company’s headquarters from Delaware to Texas.
The vote is scheduled to take place at the company’s annual general meeting on June 13. For shareholders, it’s a chance to reaffirm Musk’s leadership of the company at a time when Tesla’s sales have fallen amid slowing demand and growing competition.