Home Tech Tesla asks shareholders to support Elon Musk’s $56 billion payment rejected by judge

Tesla asks shareholders to support Elon Musk’s $56 billion payment rejected by judge

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Tesla asks shareholders to support Elon Musk's $56 billion payment rejected by judge

Tesla on Wednesday asked its shareholders to once again approve CEO Elon Musk’s record $56 billion salary set in 2018. A Delaware judge rejected the pay package in January, calling it excessive and saying the board of directors of the company did not justify it.

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The compensation does not include salary or cash bonus, but establishes rewards based on Tesla’s market value increasing to $650 billion over the next 10 years. Tesla is now valued at more than $500 billion, according to LSEG data.

Musk’s payment was rejected by Kathaleen McCormick of the Delaware Chancery Court, who called the compensation awarded by the board “an unfathomable sum” that was unfair to shareholders.

The company’s request for a new vote is an apparent attempt to shore up support for Musk’s pay package and serve as a public rejection of the court’s decision. The January ruling, which can be appealed, had struck down the largest pay package at U.S. companies.

“We do not agree with what the Delaware court decided, and we do not believe that what the Delaware court said is how corporate law should or does work,” board chair Robyn Denholm wrote in a letter included in the regulatory document.

McCormick also oversaw Twitter’s July 2022 lawsuit against the businessman when he attempted to break his $44 billion contract to buy the social media platform.
Musk’s compensation for 2023 was $0, the filing shows. The billionaire receives no salary from the company and is compensated through stock options.

“If legally advisable, we suggest simply putting the original 2018 package to a new shareholder vote,” Tesla said in its filing.

The electric car maker also urged its investors in a regulatory filing to approve its decision to move the company’s state of incorporation from Delaware to Texas.

Shares of the world’s most valuable automaker were up 1% before the bell.

Tesla has struggled this year, failing to meet market expectations and reporting a drop in deliveries for the first time in four years. Musk announced earlier this week that he was laying off about 10% of the company’s global workforce – which amounts to about 14,000 employees – amid falling sales.

Growth in the overall electric car market has slowed in recent months, as major manufacturers such as Ford reduced His plans. Meanwhile, Apple laid off 600 employees this month after canceling its multibillion-dollar plan to develop a self-driving electric car.

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