Tesla doubles down on Musk’s $87b pay package, dismissing court ruling

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The electric carmaker will ask shareholders to vote again on massive compensation package for Chief Executive Officer Elon Musk that was nixed by a Delaware court early this year.

, Tesla also said it will call a vote on moving the company’s state of incorporation to Texas from Delaware. The carmaker will convene its annual meeting on June 13.Tesla chair Robyn Denholm criticised the Delaware Chancery Court’s January decision, writing in the proxy that it amounted to second-guessing shareholders who had approved Musk’s performance-based award in 2018. Chief Judge Kathaleen St. J.

The shareholder who sued Tesla over the CEO’s compensation criticised it as excessive and opaque. Musk, who runs six companies, said early this year he preferred to work on artificial intelligence and robotics products elsewhere unless he owns a 25 per cent stake in Tesla. He currently owns about 13 per cent of the company, according to data compiled by Bloomberg.

Negotiating a new pay package would take time and lead to incurring billions of dollars in additional compensation expense, the filing said. Ratifying the 2018 package will be faster and “avoid a prolonged period of uncertainty regarding Tesla’s most important employee.” Tesla cited a letter Denholm had received from T. Rowe Price Group, one of the automaker’s biggest shareholders, which called the ruling “a negative surprise,” and suggested that the package be put up for another vote.“With the benefit of hindsight, we don’t think there can be any serious argument over whether the award was aligned with investors’ long-term interests,” the asset manager wrote.

 

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