Weeks after Tesla reported its first year-over-year delivery drop since 2020, and days after an internal email from CEO Elon Musk confirmed that the company was laying off more than 10% of its workforce, Tesla is asking shareholders to vote yes on Musk’s record-setting, multi-billion-dollar pay package.
Tesla filed a proxy statement with the Securities and Exchange Commission on Wednesday asking shareholders to approve a $56 billion compensation package for Musk at its annual June 13 meeting.
The package was first approved by 73% of Tesla shareholders in 2018, giving Musk the chance to buy hundreds of millions of Tesla shares at a preset price if the company hit certain high financial targets under his leadership.
The compensation package would have been the highest in U.S. corporate history, according to The New York Times. But some shareholders were against it, including Pennsylvania resident Richard Tornetta, who sued Musk in 2018 over the pay deal.
Tesla did achieve its financial milestones, but Delaware judge Kathaleen McCormick ultimately sided with Tornetta and overturned Musk’s pay package in January, deeming it “an unfathomable sum.”
Elon Musk on April 13, 2024. (Photo by Axelle/Bauer-Griffin/FilmMagic)
McCormick started the 200-page ruling with the question “Was the richest person in the world overpaid?” By the end of the document, her answer was yes.
McCormick wrote that Musk “dominated the process that led to board approval of his compensation plan” and that his attorneys “were unable to prove that the stockholder vote was fully informed because the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process.”
After McCormick’s ruling, Musk simply posted on X, formerly Twitter: “Never incorporate your company in the state of Delaware.” Another matter up for a vote at Tesla’s annual meeting happens to be moving Tesla’s legal home to Texas from Delaware.
Tesla framed the Delaware ruling as the court “second-guessing” the decision of shareholders.
“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,” the proxy statement read. Musk did sell $23 billion in Tesla stock in 2022 and has about 238 million of his 411 million Tesla shares pledged to secure personal loans.
Tesla claims that shareholders are more aware of the conflicts of interest and process undertaken to arrive at the 2018 pay package because the legal case in Delaware publicized these details.
Tesla’s annual meeting will happen on June 13 at 3:30 p.m. Central Time.
