9:08 am, May 18, 2024
The chairwoman of Tesla’s board of directors says the firm faces a mountainous task in trying to persuade shareholders to agree to Elon Musk’s record pay deal.
As reported by Car Dealer last month, they are being asked to approve the whopping $56bn (circa £45bn) pay awarded to Tesla’s CEO in 2018 but which a judge refused earlier this 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.
The court said Tesla’s board hadn’t acted in the interests of shareholders and criticised it for being ‘supine servants of an overweening master’. It also targeted Robyn Denholm, who has been chairwoman since 2018, for a ‘lackadaisical approach to her oversight obligations’, according to The Times.
Tesla is currently incorporated in Delaware but Musk subsequently said he would be looking to move it to Texas, and shareholders will be asked to approve that as well at the annual meeting on June 13.
The company is struggling to counter low demand plus damage caused to its reputation by Musk’s political bent as well as an antisemitic comment that he made last year.
Denholm is taking part in a roadshow to woo investors, and The Times said she labelled accusations that she was too near to Musk as ‘crap’, and called the court’s criticisms ‘absolute BS’.
However, she conceded that trying to get shareholders on side was ‘like climbing Mount Everest’.
The Times quoted Denholm as telling the Financial Times: ‘The vote’s pretty important for us as a company, but I also think it’s important for corporate America as well.
‘We’re [in the] very early days of the campaign and we will be meeting with [shareholders] all the way through to the day of the vote.’
Musk only needs a simple majority of votes, excluding shares that he and his brother Kimbal own. But the vote for reincorporation needs a majority of all outstanding shares, and any that aren’t cast will count as a ‘no’.
Denholm was quoted as saying: ‘It’s like Mount Everest. It’s a huge hill to climb because getting 50% of the shareholders to vote, let alone what they vote for, is quite tough.’
If approved, the deal will see Musk’s shareholding in Tesla rise to more than 20% from just under 13%.
According to Forbes, his estimated net worth is $195bn (circa £153.5bn).
Main picture: PA/AP
