Tesla appeals a court ruling rejecting Musk’s substantial compensation plan while pushing for a new vote.
Tesla’s board is asking shareholders to back Elon Musk’s ambitious $56 billion pay package, which was previously deemed excessive by a Delaware judge. The decision to seek a new vote on the issue comes after Chancellor Kathaleen St Jude McCormick ruled that the pay package, the largest in corporate America, was too generous and not in the best interests of Tesla’s shareholders.
The compensation plan, awarded to Musk in 2018, could be worth approximately $55.8 billion over 10 years, contingent on achieving certain company milestones. However, in her January ruling, McCormick described the package as “unfathomable” and declared it was unfair to the shareholders. Musk, 52, has since argued that he has not been paid for the past six years, despite his leadership driving significant growth at the electric vehicle manufacturer.
In an official filing with federal regulators earlier this week, Tesla stated its intention to push forward with a proposal to relocate the company’s corporate headquarters from Delaware to Texas, another issue that will be presented to shareholders for approval at Tesla’s annual meeting on June 13.
Chairperson Robyn Denholm expressed strong disagreement with the Delaware court’s ruling, stating in the filing, “We do not agree with what the Delaware court decided, and we do not think that what the Delaware court said is how corporate law should or does work.” She further emphasised to shareholders that Musk has not received compensation for the past six years, despite overseeing remarkable growth and increasing shareholder value. This, Denholm argued, was “fundamentally unfair” and against the wishes of the shareholders who had previously voted for the package.
Alongside the ongoing compensation dispute, Tesla also informed its employees this week that it plans to lay off approximately 14,000 workers globally, accounting for 10% of its workforce. This announcement follows a decline in vehicle deliveries in the first quarter of 2024, marking Tesla’s first drop in deliveries in four years.
