Tesla said that they are asking shareholders to vote again on Elon Musk’s $56 billion pay package after a Delaware judge voided it earlier this year after ruling that the record-setting compensation deal was “deeply flawed.” In a proxy filing published Wednesday, Tesla said it would hold a vote on moving its state of incorporation to Texas from Delaware; Musk had suggested the move after his pay package was ruled illegal. Tesla is set to hold its annual shareholders meeting on June 13 (per CBS News).
A Delaware judge in late January threw out the share-based payout, calling it an “unfathomable sum” and unfair to shareholders. In her ruling, the judge accepted the shareholder lawyers’ argument that Musk personally dictated the landmark pay package in sham negotiations with directors who were not independent. The ruling had some investors anticipating that Tesla might revamp its governance, as the board had long faced criticism with Musk as CEO.
In looking to re-ratify Musk’s 2018 pay package, Tesla argued that “corporate democracy and stockholder rights” are at stake, telling shareholders the court had “rescinded the pay package that an overwhelming majority of you voted to grant.” n a letter to stockholders, Tesla cited the need to carefully manage its resources for its decision. The announcement came days after news that the electric-car manufacturer would reduce its workforce by 10% globally, or about 14,000 people.
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