Musk may leave Tesla if $56B pay package not approved
Tesla's board chair, Robyn Denholm, has urged shareholders to approve a substantial $56 billion pay package for CEO Elon Musk. Denholm warned that failure to approve the package could lead to Musk's departure from the company. The shareholders will vote on this compensation package for the second time on June 13, following a Delaware judge's decision to void the first approval due to a flawed process.
Musk's unique role and compensation at Tesla highlighted
In a letter to shareholders, Denholm emphasized that "Elon is not a typical executive, and Tesla is not a typical company," suggesting conventional compensation methods would not suffice for Musk. She implied that without proper motivation, Musk might consider other opportunities where he could make a significant impact. The proposed $56 billion pay package would make Musk the highest-paid CEO in modern history.
Early voting indicates support for Musk's pay proposal
Despite recommendations against approving Musk's pay proposal from several proxy firms, early voting suggests he may receive what he wants. A report by trading platform eToro last month showed that about 25% of Tesla's shares have already voted, with over 80% in favor of Musk's package. Additionally, Musk is seeking more control over Tesla through a 25% stake to achieve his goals of developing artificial intelligence and self-driving cars.
Shareholder challenges Musk's pay package and corporate move
Shareholder Donald Ball, who owns more than 28,000 Tesla shares, has sued to challenge a proxy vote on whether Tesla should move its corporate home to Texas and re-approve Musk's $56 billion pay package. Ball accuses Musk of using coercive tactics to obtain stockholder approval and argues that the EV maker is violating its corporate charter by requiring only a bare majority of shareholders' votes to move its state of incorporation away from Delaware.
Ball's lawsuit alleges Musk violated proxy vote rules
Ball's lawsuit alleges that Musk violated proxy vote rules by threatening to step down as Tesla's CEO and take its AI assets with him. He is seeking a ruling that Tesla directors failed to disclose enough details of the incorporation shift and re-ratification of Musk's pay so that investors can make an informed decision. The case is likely to be assigned to Delaware Chancery Judge Kathaleen St. J. McCormick, who has presided over several cases involving Musk in recent years.
