Tesla (TSLA.O) has requested its shareholders to once again approve CEO Elon Musk’s record-breaking $56 billion pay package, which was initially set in 2018 but rejected by a Delaware judge in January. The compensation plan, which excludes salary or cash bonuses, offers rewards based on Tesla’s market value reaching up to $650 billion over the next decade. Currently, Tesla is valued at $500.36 billion, according to LSEG data.
The re-vote on Musk’s pay package precedes Tesla’s quarterly earnings announcement next week, amidst challenges such as weak demand and reputational concerns stemming from Musk’s political views and previous antisemitic comments. The rejection of Musk’s pay package by Kathaleen McCormick of Delaware’s Court of Chancery in January nullified what was deemed the largest pay package in corporate America, although it can be appealed.
Tesla’s board’s special committee has expressed uncertainty about the potential re-approval of the pay package under Delaware law, describing their approach as “novel.” Xu Jiang, an associate professor of business administration at Duke University, highlighted that even if the proposal is approved, it cannot supersede the judge’s decision, unless Musk successfully appeals. However, a substantial approval by shareholders for the second time could strengthen Musk’s case for a future appeal.
Source: Reuters