Tesla's Elon Musk Faces Vote on $56 Billion Pay Package After Court Nullifies Plan

Tesla has requested its shareholders to vote on Elon Musk's $56 billion pay package once more, as a Delaware judge invalidated the largest compensation plan in corporate America. The electric-car manufacturer disclosed in a proxy filing that it will also seek approval to relocate its state of incorporation from Delaware to Texas. The annual shareholders meeting is scheduled for June 13, where these decisions will be addressed.

Reduction in Tesla's Headcount

Following the recent announcement of a 10% global workforce reduction, approximately 14,000 employees, Tesla emphasized the necessity of resource management in a letter to its stockholders.

SpaceX Shifts Incorporation to Texas

Elon Musk's SpaceX has also made a move to shift its incorporation to Texas, alongside Tesla's attempt to relocate. The shift signifies Musk's continued divergence from Delaware and his proactive engagement in Texas.

Tesla's Efforts to Re-Ratify Musk's 2018 Pay Package

In its pursuit to re-validate Musk's 2018 pay package, Tesla stressed the significance of "corporate democracy and stockholder rights," clarifying that the court's decision had annulled a pay package previously approved by the majority of shareholders. The court's nullification of the share-based payout, stated to be an "unfathomable sum" and unfair to shareholders, was influenced by arguments from shareholder lawyers. They contended that Musk had orchestrated the pay package in questionable negotiations with non-independent directors, a claim accepted by the Delaware judge.

Expectations for Governance Revamp

Investors anticipate a potential overhaul of Tesla's governance following the court's ruling, with the board under scrutiny for its perceived reluctance to moderate Musk's controversial actions. The decision to nullify Musk's pay package has raised expectations for improved governance procedures at Tesla.