Tesla urges shareholders to reapprove Musk's $56 billion package
Tesla, the electric vehicle manufacturer, is encouraging its shareholders to reapprove a substantial $56 billion compensation package for CEO Elon Musk. This move comes after a Delaware court invalidated the payout initially agreed upon in 2018. The company disclosed this information in a proxy filing released today. Additionally, Tesla unveiled plans to contemplate changing its state of incorporation from Delaware to Texas. A meeting to discuss these matters is scheduled for June 13.
Tesla chairperson disagrees with Delaware court's ruling
Tesla Chairperson Robyn Denholm expressed her disagreement with the Delaware Chancery Court's January ruling, which she believes undermines the judgment of shareholders who had approved Musk's compensation. Chief Judge Kathaleen McCormick depicted Tesla's directors as "supine servants of an overweening master," suggesting they did not prioritize investors' best interests. In a proxy statement, Denholm defended Musk, stating that due to the court's decision, "Elon has not been paid for any of his work for Tesla for the past six years."
Musk's compensation challenged by shareholder
The legal dispute regarding Musk's compensation was initiated by a shareholder who deemed it excessive and unclear. Musk, who currently manages six companies, hinted earlier this year that he would prefer to focus on artificial intelligence and robotics projects elsewhere, unless he maintains a 25% stake in Tesla. Currently, he owns approximately 13% of the company.
Tesla shares experience modest rise amid controversy
Tesla shares experienced a modest increase of 1.1% as of 7:00am New York time, prior to the commencement of regular trading hours. However, this year has seen a significant decrease in Tesla's stock value, with a drop of 37% up until Tuesday's close. This fluctuation comes amid the ongoing controversy surrounding Musk's compensation package, and potential changes to the company's state of incorporation.
