Technology
Wednesday, April 17th, 2024 2:04 pm EDT
Key Points
- Tesla seeks shareholder approval to reinstate Elon Musk’s $56 billion pay package, invalidated by a Delaware judge due to flaws in the compensation deal.
- The company also proposes moving its incorporation from Delaware to Texas, a suggestion initially made by Musk after the court ruling, amidst plans to cut its workforce by 10%.
- The proposals are anticipated to spark controversy, with Tesla hiring a proxy solicitor to secure votes, emphasizing institutional shareholders’ disagreement with the court decision and defending the relocation as part of Tesla’s innovative ethos.
Tesla is seeking shareholders’ approval to reinstate CEO Elon Musk’s $56 billion pay package, which was invalidated earlier this year by a Delaware judge due to flaws in the compensation deal. Additionally, Tesla aims to relocate its incorporation from Delaware to Texas, a move initially suggested by Musk after the court ruling. This decision follows the announcement of a 10% reduction in the company’s workforce. Tesla views the court ruling as a significant challenge, prompting the need for fundamental changes. The proposals are expected to spark controversy, with Tesla hiring proxy solicitor Innisfree M&A to secure votes. Musk’s invalidated pay package stemmed from a shareholder lawsuit, highlighting governance concerns where the court found Musk’s influence over Tesla’s board problematic. The decision, dubbed the Tornetta ruling, led Musk to criticize incorporating in Delaware. Tesla disputes the ruling, alleging factual errors and misinterpretations by the Delaware court. The company emphasizes institutional shareholders’ disagreement with the decision. Delaware’s legal framework attracts many corporations due to its robust court system. In proposing the move to Texas, Tesla acknowledges deficiencies in its initial 2018 disclosures, as highlighted by the court. Despite Musk’s prior public suggestion, Tesla insists that both he and his brother recused themselves from deliberations. The company defends Texas as its future home, emphasizing its potential and the commonality of companies not incorporating in Delaware. While acknowledging Delaware’s legal stature, Tesla underscores its innovative spirit as a driving force behind the relocation proposal.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/17/elon-musk-pay-tesla-to-ask-holders-to-reinstate-voided-stock-grant.html
