4:50 pm, April 17, 2024
Shareholders in Tesla were today asked once again to approve the whopping $56bn (circa £45bn) pay awarded to CEO Elon Musk in 2018 but which a judge refused this year.
The so-called compensation doesn’t include a salary or cash bonus, rather it’s rewards-based depending on the market value of the EV maker increasing to up to $650bn (£522bn) during the next decade.
Tesla’s value now stands at $500.36bn (£401.88bn), according to London Stock Exchange Group data.
The call for a fresh vote comes ahead of Tesla’s latest quarterly earnings, which are due out next week.
The company, which is incorporated in Delaware, is struggling to counter low demand as well as damage caused to its reputation by Musk’s political bent as well as an antisemitic comment that he made last year.
Delaware chancery judge Kathaleen McCormick threw out Musk’s compensation in January, calling corporate America’s record-breaking pay award ‘an unfathomable sum’ that wasn’t fair to shareholders, reported Reuters.
But an appeal was allowed, and in a letter that formed part of a regulatory filing, board chairperson Robyn Denholm wrote: ‘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 board’s special committee can’t actually predict if reapproving Musk’s compensation would be proper under Delaware law, and even went as far as describing its move as ‘novel’.
Reuters quoted Duke University associate professor of business administration Xu Jiang as saying: ‘Even if the proposal is approved, it cannot override the judge’s decision, which is legally binding, at least until Musk appeals successfully.
‘If shareholders overwhelmingly approve the proposal for the second time, it would help Musk in his future appeal.’
Investors in Tesla were also asked today to agree to its plan to move its incorporation state to Texas. That would see it following in the footsteps of rocket company SpaceX.
Musk has had a number of feuds with the Delaware state regulators, with him criticising what he regards as red tape.
Main image credit: Kirsty Wigglesworth/PA
