Tesla will be holding a shareholder vote to reinstate a US$56 billion pay package, just days after the company announced it would be laying off 14,000 employees, or 14% of its workforce. The shareholder vote will be held at the AGM on June 13, 2024.
This is the same US$56 billion pay package in the form of Tesla share options that was voided by a court back in January 2024. The court decided Elon Musk’s Tesla compensation plan from 2018 was not developed in a fair process due to his significant influence over Tesla and the directors involved in the plan’s approval. Delaware judge Kathaleen McCormick ruled that rescission is an appropriate remedy.
Musk’s US$56 billion compensation plan was the largest package ever developed in the history of public companies and involved 12 tranches of Tesla stock options, which would vest if the company’s market capitalization increased by $50 billion and Tesla achieved a revenue target.
In the case, it was decided that the people who negotiated the CEO’s pay package on Tesla’s behalf were under the influence of the CEO. So even though shareholders voted in favour of the compensation plan, we have no idea if they could have been voting for a less generous plan.
Musk previously expressed concerns about not having at least 25% shareholding in Tesla. He says its not about the money, but 25% is necessary for influence on the direction that the company takes. He implied a preference to work on projects outside of Tesla if he cannot have 25%.
He added that owning the current 13% shares is not enough motivation to “show up for work”, referencing other shareholders like Fidelity who currently own a similar amount of shares but are not expected to work.
The US$56 billion pay package can be restored by voting for it again, this time ensuring the holes that allowed the court judgement to happen are plugged.
In addition to voting for the pay package, shareholders will also be asked to approve reincorporating the company in Texas. The rationale for this is that Delaware courts did not respect Tesla shareholders will by reversing the pay package which shareholders had previously approved. Texas was chosen as Tesla currently already has its physical headquarters and a gigafactory in Texas.
You can read more about the vote at supportteslavalue.com
The post Tesla asks shareholders for US$56 billion pay for Musk appeared first on Paul Tan's Automotive News.
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