Tesla again seeks shareholder approval for Musk's 2018 pay voided by judge
Technology
Tesla again seeks shareholder approval for Musk's 2018 pay voided by judge
(Reuters) - Tesla (TSLA.O), opens new tab on Wednesday once again sought shareholder approval for CEO Elon Musk's record-breaking $56 billion compensation that was set in 2018, but was rejected by a Delaware judge in January.
The re-vote comes ahead of next week's quarterly earnings for Tesla, which is grappling with weak demand as well as a reputational hit to Musk from his political leanings and approval of an antisemitic conspiracy theory last year.
"Elon has not been paid for any of his work for Tesla for the past six years...," Board Chairperson Robyn Denholm wrote in a letter included in the regulatory filing, opens new tab. "That strikes us — and the many stockholders from whom we already have heard — as fundamentally unfair."
Tesla's board, which includes Musk's brother Kimbal Musk, has repeatedly come under fire for its close ties with the billionaire.
In seeking a re-vote, Tesla is using a section of Delaware law that allows companies to ratify actions that are technically defective such as selling stock before the board approves an increase in shares, but not always controversial.
The board's special committee, which was formed to insulate the process of setting the pay from allegations of Musk's influence, said it cannot predict if its "novel" approach of getting a re-approval would be proper under Delaware law.
The largest pay package in corporate America has no salary or cash bonus and sets rewards based on Tesla's market value rising to as much as $650 billion over the next 10 years from 2018.
Tesla shares fell nearly 2% after the company's latest move, putting its market value on track to close below $500 billion for the first time in about a year.
If Tesla shareholders vote in favor, it would not automatically entitle Musk to the money, Eric Talley, a Columbia Law School professor, said.
Approval would fix the flawed 2018 shareholder vote process, Talley said, but Musk would need to appeal to overturn the findings that he controlled the negotiation process that led to the record-breaking compensation.
Musk is expected to appeal the ruling later this year after the trial court determines how much the shareholder's legal team should be paid by Tesla.
