Detroit, Michigan – Tesla is seeking approval from shareholders to reinstate a $56 billion compensation package for CEO Elon Musk and to relocate the company’s corporate headquarters from Delaware to Texas. This move comes after a judge in Delaware rejected the compensation package earlier this year, ruling that Musk was not entitled to the landmark deal awarded by Tesla’s board of directors.
The decision to seek shareholder approval on these matters will be put to a vote during Tesla’s annual meeting on June 13. Musk has been embroiled in a legal battle over his compensation package since it was challenged by a Tesla shareholder lawsuit five years ago.
In response to the judge’s ruling, Musk has already moved the corporate listing of his brain implant company, Neuralink, from Delaware to Nevada. Tesla’s Chairperson, Robyn Denholm, defended Musk’s performance in a letter to shareholders, highlighting the growth achieved under his leadership.
Despite Tesla’s record deliveries of over 1.8 million electric vehicles worldwide in 2023, the company’s stock value has been declining due to softer sales of electric vehicles this year. This has raised concerns about future growth and the willingness of shareholders to support a high compensation package for Musk.
One issue not addressed in the proxy statement filed with the Securities and Exchange Commission is Musk’s demand to own 25% of Tesla shares to pursue artificial intelligence and robotics projects at the company. Musk has previously expressed his interest in these areas and has challenged the Tesla board to come up with a new compensation package.
Some analysts, such as Dan Ives, have raised concerns about Musk’s future compensation and the need for clarity on Tesla’s growth plans. The uncertainty surrounding Musk’s compensation and role in the company has contributed to a decline in Tesla’s stock price this year.
With Tesla cutting prices and announcing layoffs, the company is facing challenges on multiple fronts. The board’s decision to seek approval from shareholders on Musk’s 2018 pay package reflects a desire to address concerns and maintain transparency with investors.
As Tesla prepares to announce its first-quarter earnings, all eyes will be on Musk’s plans for future growth and the company’s ability to navigate a competitive and evolving market for electric vehicles. The outcome of the shareholder vote on Musk’s compensation package will be a pivotal moment for Tesla and its leadership moving forward.