Tesla will ask its shareholders to vote to approve the 2018 pay package that made CEO Elon Musk among the world's richest people but that a Delaware judge threw out earlier this year.
A judge says Elon Musk must give up a compensation package awarded by Tesla 's board of directors that is potentially worth more than $55 billion.The pay package gave Musk options to buy 303 million split-adjusted shares of Tesla at the cost of $23.34 a share each. At the time that a Delaware court threw out the pay package in January, it was worth $51 billion. But a drop in the value of Tesla shares since then has reduced its value to $40.7 billion.
Delaware Chancery Court Chancellor Kathaleen McCormick ruled in January that Musk and the Tesla board "bore the burden of proving that the compensation plan was fair, and they failed to meet their burden."Tesla argued in its filing Wednesday that the pay package was fair to shareholders because the value of their shares had soared since 2018.
The case was brought in Delaware because that's where Tesla and many other major companies are incorporated. Musk responded to the decision in January by tweeting "Never incorporate your company in the state of Delaware." He announced plans soon after that to move Tesla's state of incorporation to Texas, where its headquarters is now based. The filing Wednesday asked shareholders to approve that move of incorporation as well.The proxy did not announce a new pay package for Musk for his work for Tesla going forward. The 2018 package would reward him for financial goals and market value of the stock that Tesla has already achieved.
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