Achi news desk-
AUSTIN, Texas –
Tesla will ask shareholders to restore a US$55 billion compensation package for CEO Elon Musk that was rejected by a Delaware judge this year and move the electric car maker’s corporate home from Delaware to Texas.
In a filing with federal regulators early Wednesday, the company said it would ask shareholders to vote on both issues during its annual meeting on June 13.
In January, Chancellor Kathaleen St. Jude McCormick that Musk is not entitled to a major compensation package awarded by Tesla’s board of directors that could be worth more than $55 billion over 10 years starting in 2018.
Five years ago, a Tesla shareholder lawsuit claimed the pay package should be voided because it was set by Musk and was the result of sham negotiations with directors who were not independent of him.
Musk said a month after the judge’s ruling that he would try to move Tesla’s corporate listing to Texas, where he has already moved the company’s headquarters.
Almost immediately after the judge’s ruling, Musk did just that with Neuralink, his private brain implant company, moving its corporate home from Delaware to Nevada.
In a letter to shareholders this week, Chairman Robyn Denholm said Musk had delivered the growth he was looking for at the automaker, with Tesla meeting all targets for the CEO’s 2018 pay package.
“Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped generate significant growth and stockholder value,” Denholm wrote. “That strikes us – and the large number of stockholders we have already heard from – as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it.”
Tesla posted record deliveries of more than 1.8 million electric vehicles worldwide in 2023, according to regulatory filings. But the value of its shares has eroded rapidly this year as sales of electric vehicles have softened.
Future growth is in doubt and it may be a challenge to get shareholders to support a fat pay packet in an environment where competition has increased worldwide and demand for electric vehicle sales is fading.
Tesla shares have lost more than a third of their value this year as massive price cuts have failed to attract more buyers. The company said it had delivered 386,810 vehicles between January and March, almost 9% less than sold in the same period last year.
At the time of the Delaware court ruling, Musk’s package was worth more than $55 billion, but the court may have cost the mercurial CEO over $10 billion due to the company’s stock slide this year. The filing said Musk’s 2018 compensation was worth $44.9 billion at the close of trading on April 12.
Since last year, Tesla has cut prices by as much as $20,000 on some models. The price cuts caused used electric vehicle values ​​to drop and Tesla’s profits to click.
This week, Tesla said it was letting about 10 percent of its workers go, about 14,000 people.
In the filing, Tesla’s board wrote that the board decided to seek shareholder approval for Musk’s 2018 pay package after it received a report from a special committee of one board member, Kathleen Wilson-Thompson.
The shareholder vote is advisory only, but the board wrote that if there is any significant vote against executive pay packages, “we will consider the concerns of our stockholders, and the compensation committee will evaluate whether any action is necessary to go to address those concerns.”
