The proposals come as the EV maker struggles with falling global sales, slowing demand, an aging model lineup and a stock price that has tumbled this year.
By Tom Krisher, Stan Choe and Michelle Chapman, Associated PressFILE - Tesla CEO Elon Musk leaves the Tesla Gigafactory for electric cars after a visit in Gruenheide near Berlin, Germany, on March 13, 2024. Elon Musk will ask Tesla shareholders to reinstate the compensation package that was rejected by a judge in Delaware this year and to move the electric carmaker’s corporate home from Delaware to Texas.
Ruling on a lawsuit from a shareholder, she voided the pay package, saying that Musk essentially controlled the board, making the process of enacting the compensation unfair to stakeholders. “Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf,” she wrote in her ruling.
If shareholders don’t ratify the plan, Tesla said it may need to negotiate a replacement with Musk. That may take a lot of time and expense “in light of the criticism” detailed in the Delaware suit. Many CEOs at big companies need to hit targets to get a lot of their possible compensation. That’s to encourage decisions that benefit the company and shareholders at large. But Musk was unusual in having all of his pay dependent on such measures.
Erik Gordon, a lawyer and business professor at the University of Michigan, said that since Tesla would still be a Delaware corporation at the time of the vote on the package, shareholders could still challenge it in Delaware courts. The company said it delivered 386,810 vehicles from January through March, nearly 9% fewer than it sold in the same period last year. Future growth is in doubt and it may be a challenge to get shareholders to back a fat pay package in an environment where competition has increased worldwide.
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