Tesla asked investors Wednesday to “restore shareholder democracy” by ratifying CEO Elon Musk’s $56 billion pay package that was struck down by a Delaware judge in January. The plan was the largest executive compensation package in history and —briefly — made him the the world’s richest person.
Judge Kathaleen McCormick found that defendants in a shareholder lawsuit, which included Musk and Tesla’s board, failed to meet the burden in proving that “the compensation plan was fair.” McCormick added that the “process leading to the approval of Musk’s compensation plan was deeply flawed.”
Tesla argues that the plan was valid, stating that 73% of shareholders approved the 2018 pay package, according to a proxy statement filed Wednesday. Musk — whose net worth is $184.8 billion, according to Forbes — has not been paid for “any of his work for Tesla” since 2018, according to the Austin, Texas-based company. He has served as CEO since 2008.
Shareholders will vote on the proposal at Tesla’s annual shareholders meeting on June 13. Investors will also vote on a series of other proposals, including whether or not Tesla should reincorporate its business in Texas, where it is headquartered and operates a sprawling factory dedicated to building Cybertruck electric pickups and Model Y SUVs.
McCormick’s ruling infuriated Musk, who in January immediately moved to ask shareholders to vote on changing the state where the company is incorporated from Delaware to Texas. SpaceX, his aerospace company, filed to reincorporate its business in Texas in February.
“We have received letters from thousands of Tesla stockholders — large and small — supporting a move home to Texas,” Tesla board chairman Robyn Denholm wrote in a letter to investors. “We have heard you, and now we formally ask that you speak in a meaningful way: and vote in favor of taking Tesla to our business home of Texas.”
Tesla stock ticked up slightly in pre-market trading Wednesday morning. The stock has fallen almost 37% so far in 2024, making Tesla one of the worst performers in the S&P 500.
This is a developing news story and will be updated.