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19-04-2024
NEW YORK: Tesla is again seeking to award boss Elon Musk the biggest pay deal in corporate American history, worth $56bn (£44.9bn).
The electrical vehicle (EV) company is asking shareholders to vote on its chief executive’s record-breaking pay that was set in 2018.
However, the deal was rejected by a US judge in January who described it as “an unfathomable sum”.
It comes just days after Musk announced plans to cut more than 10% of its global workforce.
In a memo issued to staff Musk said there was nothing he hated more, “but it must be done”.
Now, his remuneration is in the spotlight, although the proposed compensation includes no salary or bonus.
Instead, the 2018 deal set rewards based on Tesla’s market value rising to as much as $650bn over 10 years. Stock in the EV company is now valued at $500.36bn, according to data.
At the time of her ruling Delaware-based Judge Kathaleen McCormick said the pay deal was unfair to shareholders.
She found Tesla directors, who negotiated the deal, were “perhaps starry eyed” due to Musk’s “superstar appeal” and did not fully inform shareholders.
The decision outraged Musk, who subsequently threatened to move Tesla’s headquarters from Delaware to Texas.
On Monday, Tesla filed paperwork asking shareholders to approve that move and sign off on the 2018 pay package again.
Board chair Robyn Denholm wrote in a letter included in the regulatory filing: “Elon has not been paid for any of his work for Tesla for the past six years… That strikes us, and the many stockholders from whom we already have heard, as fundamentally unfair.”
Denholm also maintained the board did not agree with the court’s ruling. “We do not think that what the Delaware Court said is how corporate law should or does work,” she said.
Musk’s compensation for 2023 was $0, the filing showed, as the billionaire does not take a salary from the company and is compensated through stock options.
“If it is legally advisable, we suggest simply subjecting the original 2018 package to a new shareholder vote,” Tesla said, adding that it still planned to appeal the ruling.
The re-vote comes at a tricky time for the company which has seen the fewest deliveries of EVs since 2022. The weak demand comes ahead of its quarterly earnings which are revealed next week.
Musk is also trying to recover his reputation after a turbulent year. Tesla had to recall cars over safety concerns, Musk was caught up in an anti-Semitic conspiracy row and had repeated problems with X, his social media platform but regardless, Bloomberg and Forbes estimated Musk’s net worth to be between $198bn and $220bn in November 2023, making him the richest person in the world.
A judge in the US state of Delaware has annulled a $55.8bn (£44bn) pay deal awarded to Elon Musk in 2018 by the electric car company Tesla.
The lawsuit was filed by a shareholder who argued that it was an overpayment.
Judge Kathaleen McCormick found Tesla directors, who negotiated the pay package, were “perhaps starry eyed” due to Musk’s “superstar appeal” and did not fully inform shareholders. She said the deal was “unfathomable” and ruled it should be cancelled. (Int’l News Desk)
