Tesla is set to ask its shareholders to once again vote on approving the controversial 2018 pay package for CEO Elon Musk, which was recently thrown out by a Delaware judge.
CNN reports that in a surprising turn of events, Tesla has announced that it will seek shareholder re-approval for the 2018 compensation package awarded to its CEO, Elon Musk. The package, which granted Musk options to purchase 303 million split-adjusted shares of Tesla at $23.34 per share, was originally valued at $51 billion when a Delaware court threw it out in January. However, due to a recent drop in Tesla’s share price, the package’s current value stands at $40.7 billion.
Elon Musk shades his eyes in front of a Tesla ( Maja Hitij /Getty)
The decision to seek re-approval comes after Delaware Chancery Court Chancellor Kathaleen McCormick ruled that Musk and the Tesla board had failed to prove that the compensation plan was fair. In response, Tesla argued in its SEC filing that the package was indeed fair to shareholders, citing the significant growth in the company’s stock value since 2018.
Tesla chairperson Robyn Denholm, stated in the proxy, “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 original 2018 vote saw 73 percent of Tesla shares not held by Musk or his brother vote in favor of the package. Musk, who does not receive a straight salary and is only compensated through stock options based on the company’s achievements, has expressed his discomfort with growing Tesla’s AI and robotics leadership without having around 25 percent voting control.
In addition to seeking re-approval for the pay package, Tesla is also asking shareholders to approve the company’s move of incorporation from Delaware to Texas, where its headquarters is now based. This move comes after Musk’s criticism of Delaware’s corporate laws following the court’s decision in January.
The announcement comes amidst a challenging period for Tesla, which has experienced its first year-over-year drop in sales since the height of the pandemic, increased competition, and weaker-than-expected growth in demand for electric vehicles. The company has had to cut prices to maintain demand, which has squeezed its profit margins, and recently announced plans to cut more than 10 percent of its global staff.
Read more at CNN here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
