Elon Musk’s monumental pay package might soon come to fruition.
According to The New York Times, Tesla is seeking approval from its shareholders for the CEO’s $47 billion compensation plan at the upcoming annual meeting on June 13. This plan, previously invalidated by a Delaware judge in January, faces reconsideration due to shareholders lacking essential information during the initial 2018 vote, the judge determined. Now, with full disclosure provided, Tesla aims for a second chance.
In a special board committee report cited by the Times, Tesla proposes subjecting the original 2018 package to a new shareholder vote, accompanied by comprehensive disclosure regarding the process and conflicts of interest considered at the time.
Initially endorsed by approximately 73 percent of non-Musk Tesla shareholders, this compensation plan stands to be the most lucrative in U.S. corporate history, as noted by the publication. It grants Musk the option to purchase up to 304 million shares at $23.34 per share, contingent upon him achieving significant financial milestones, which he successfully accomplished. However, a group of shareholders contested these payouts, leading to the judge’s agreement with their stance.
Tesla is currently appealing this ruling, with intentions to revive the vote on the pay package. The same committee reporting the proposal mentioned that four of Tesla’s top 10 institutional shareholders have requested a revote, indicating their renewed support. Additionally, the company’s board has received backing from thousands of shareholders in favor of the plan following the Delaware ruling.
In a letter to shareholders quoted by The New York Times, Robyn Denholm, Tesla’s chair, expressed concern over the unfairness of the situation, highlighting that Musk hasn’t received compensation for his contributions to Tesla’s growth and shareholder value over the past six years due to the court’s intervention. However, it’s expected that the shareholders who initiated the original lawsuit will oppose the plan. Their legal representatives may also attempt to sway other stockholders against Musk, citing dissatisfaction with his public behavior or the potential cost savings for the company by voiding the plan.
