Tesla urges shareholders to reinstate giant Elon Musk payday struck down by court

Georgetown, Delaware - Tesla will ask its shareholders to vote again on a $56-billion compensation package they had approved in 2018 for CEO Elon Musk before it was squashed by a court earlier this year.

Tesla shareholders are being urged to again vote in favor of a $56-billion compensation package for CEO Elon Musk that was voided in court.
Tesla shareholders are being urged to again vote in favor of a $56-billion compensation package for CEO Elon Musk that was voided in court.  © Collage: REUTERS & Odd ANDERSEN / AFP

In a filing with federal regulators on Wednesday, Tesla Chair Robyn Denholm said the board of directors stood by the original package and argued that the company's "entrepreneurial spirit" had always been one of "big risks for the chance of big rewards."

Musk's payout – worth as much as $55.8 billion in 2018 – was voided in January by a Delaware court, ruling on a complaint by an individual shareholder alleging that Musk had dictated his terms to the board, which was not sufficiently independent from its star CEO.

In the filing with the Securities and Exchange Commission, Denholm expressed the board's continued opposition to the court ruling, insisting it was not how corporate law "should or does" work.

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"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," she wrote.

"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."

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In a second proposal ahead of the June 13 shareholder meeting, the carmaker asked shareholders to support moving the company's state of incorporation from Delaware to Texas, which "is Tesla's home," Denholm said in the filing.

The proposals come amid a difficult stretch for Tesla, whose shares have fallen 37% so far in 2024 compared with a gain of about six percent in the S&P 500 over the same period.

Earlier this week, Tesla announced it would lay off more than 10% of its global workforce.

Cover photo: Collage: REUTERS & Odd ANDERSEN / AFP

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