Tesla (NASDAQ:TSLA) is gearing up to ask shareholders to reinstate a $56 billion compensation package for CEO Elon Musk, which was rejected by a Delaware judge earlier this year. Additionally, the electric car manufacturer seeks approval to relocate its corporate headquarters from Delaware to Texas.
In a filing submitted to federal regulators on Wednesday, Tesla revealed plans to address both issues at its upcoming annual meeting on June 13.
Chancellor Kathaleen St. Jude McCormick’s ruling in January invalidated Musk’s landmark compensation package, estimated at about $55.8 billion over a decade, starting in 2018. The decision stemmed from a Tesla shareholder lawsuit alleging that the pay package was influenced by Musk and involved dubious negotiations with non-independent directors.
Following the judge’s decision, Musk expressed intentions to shift Tesla’s corporate listing to Texas, where he had already relocated the company’s headquarters. Notably, he swiftly executed a similar move for Neuralink, his privately held brain implant firm, transferring its corporate base from Delaware to Nevada.
In a recent letter to shareholders, Chairperson Robyn Denholm emphasized Musk’s pivotal role in driving Tesla’s growth, highlighting the fulfillment of all targets outlined in the 2018 CEO pay package approved by shareholders. Denholm criticized the court’s ruling, noting that it deprived Musk of compensation for his substantial contributions to Tesla over the past six years.
Despite achieving record deliveries of over 1.8 million electric vehicles globally in 2023, Tesla has faced challenges this year, with its stock value declining amid weakening demand for electric vehicles. The company reported a 9% decrease in vehicle deliveries from January to March compared to the same period last year.
In addition to seeking reinstatement of Musk’s compensation package, shareholders will vote on a nonbinding advisory resolution regarding executive compensation for 2023. However, the filing does not address Musk’s demand to acquire a 25% stake in Tesla for advancing artificial intelligence and robotics initiatives within the company.
Analysts, including Wedbush’s Dan Ives, underscore the importance of Musk outlining plans for Tesla’s future growth, particularly regarding the development of the Model 2, a budget-friendly electric vehicle priced at around $25,000.
As Tesla prepares to address these issues, investors are closely monitoring developments, wary of the company’s uncertain trajectory amidst ongoing challenges and leadership dynamics.
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