Tesla shareholders set to approve Musk’s US$56b pay package
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The news: Tesla has asked shareholders to approve the relocation of its state of incorporation in order to allow Elon Musk’s request for a USD56 billion ($87.17 billion) pay package.
The numbers: Shares in Tesla dipped over 14% during trading on Tuesday, bringing its year-to-date drop to 38%, and pushed the company’s market valuation below USD500 billion.
The context: In February, a Delaware court, where Tesla is currently incorporated, voided his USD56 billion remuneration package, with judge Kathaleen McCormick ruling that the pay stub had been improperly approved by the company’s board and had short-changed shareholders. The lawsuit had been filed by a number of Tesla shareholders who claimed the award was excessive, despite shareholders having previously approved the pay deal in 2018.
On Wednesday, the Tesla board chair, Robyn Denholm, wrote to shareholders asking them to approve the relocation from Delaware to Texas and to ratify the new pay package. Denholm said: “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.”
The votes will be carried out during the company’s AGM on 13 June.
The compensation package does not include salary or cash bonus, but sets rewards based on Tesla’s market value increasing to as much as USD650 billion in the next decade.
What they said: Denholm’s SEC filing reads: “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 to generate significant growth and stockholder value. That strikes us — and the many stockholders from whom we already have heard — as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it."
The sources: Tesla SEC filing, Reuters
