Tesla is planning to ask its shareholders to reinstate a massive $56 billion compensation package for CEO Elon Musk, which was rejected by a judge in Delaware earlier this year. The company also seeks approval to move its corporate home from Delaware to Texas. These proposals will be put to a vote during Tesla’s annual meeting on June 13.
In January, Chancellor Kathaleen St. Jude McCormick ruled that Musk was not entitled to the landmark compensation package, which was potentially worth about $55.8 billion over 10 years starting in 2018. The package was challenged by a Tesla shareholder lawsuit, alleging that it was dictated by Musk and the result of sham negotiations with directors who were not independent of him.
Following the judge’s ruling, Musk expressed his desire to move Tesla’s corporate listing to Texas, where the company’s headquarters are already located. He also moved the corporate home of his privately held brain implant company, Neuralink, from Delaware to Nevada.
In a letter to shareholders, Chairperson Robyn Denholm argued that Musk has delivered on the growth targets set in the 2018 CEO pay package, which was approved by shareholders. She stated that it was “fundamentally unfair” and “inconsistent with the will of the stockholders” for Musk not to be paid for his work at Tesla over the past six years.
Despite record deliveries of more than 1.8 million electric vehicles worldwide in 2023, Tesla’s stock value has eroded quickly this year due to slumping electric vehicle sales and increased competition. The company reported a nearly 9% decrease in vehicle deliveries in the first quarter of 2023 compared to the same period last year.
Shareholders will also be asked to cast a nonbinding advisory vote on executive compensation for 2023. However, the proxy statement did not address Musk’s demand to own 25% of Tesla shares to pursue artificial intelligence and robotics at the company. Currently, he owns 20.5% of the company.
The Associated Press contributed to this article.