Connect with us

Hi, what are you looking for?

Editor’s Pick

Tesla asks shareholders to vote again on Musk’s $56 billion payout

Tesla said Wednesday it will ask shareholders to reinstate CEO Elon Musk’s $56 billion pay package, which a Delaware judge voided earlier this year after ruling that the record-setting compensation deal was “deeply flawed.”

Tesla also said it would ask shareholders to approve moving the company’s incorporation from Delaware to Texas. Musk had suggested the move after his pay package was ruled illegal. The announcement Wednesday came days after the automaker said it would cut its workforce by 10%.

Tesla said the court decision created a “fundamental problem for the company.”

The two proposals are likely to be fiercely controversial. Tesla has hired a proxy solicitor, Innisfree M&A, and plans to spend an undetermined amount, in the millions, to help secure the votes for the two proposals, according to the filing.

Tesla has not hired Innisfree since 2018, when it first asked shareholders to vote on Musk’s pay package. Companies often only advertise the cost of proxy solicitations when major proposals or proxy fights are expected. (Innisfree was also suing Musk’s Twitter over unpaid bills.)

Musk’s pay package was invalidated after a shareholder won a lawsuit against the company earlier this year. Delaware Chancery Court Chancellor Kathaleen McCormick found that Musk, rather than Tesla’s board, controlled the company and that the board’s compensation committee, rather than negotiating with Musk over the terms of the deal, “worked alongside him, almost as an advisory body.”

The Tornetta decision, named after Tesla shareholder Richard Tornetta who brought the suit, prompted Musk to say, “Never incorporate your company in the state of Delaware.”

McCormick was also the presiding judge in the legal action compelling Musk to buy Twitter, which he renamed. Tesla, in its Wednesday filing, cast doubt on her decision. “The Company and the Board believe that the decision in Tornetta ignored material evidence presented at trial and that the Delaware Court made errors of fact and incorrect conclusions of law,” Tesla said in the proxy filing.

The company also noted that “dozens of institutional stockholders” have told Tesla that they disagree with the Tornetta decision.

Delaware has long been a preferred home for corporations — more than 60% of the Fortune 500 companies are incorporated there — because the state has a robust legal framework and court system dedicated to resolving corporate issues, like executive pay, but also broader contract negotiations.

Tesla’s new proposal cautions shareholders that the Delaware court found the company’s initial 2018 disclosures to be deficient, and urged them to read the full text of the decision.

In January, the same day the pay package was rejected, Musk asked his X followers if Tesla should reincorporate in Texas. Months later, Tesla’s board agreed and is now proposing the move to Texas and asking shareholders to approve the move.

Tesla connected the Delaware decision directly to its proposal, but it said that both Elon Musk and his brother Kimbal Musk, who also sits on Tesla’s board, recused themselves from deliberations.

The company said that Tesla’s “home and future are in Texas” and that the board considered every U.S. state before narrowing it down to a head-to-head comparison between Delaware and Texas, Musk’s public comments notwithstanding.

Tesla also defends the move as commonplace, saying that 35% of S&P 500 companies are not incorporated in Delaware. The company acknowledged Delaware’s court system as world class, but said “doing new things is part of Tesla’s DNA, and how it has become one of the most valuable companies in the world.”

CNBC’s Lora Kolodny and Dan Mangan contributed to this report.

This post appeared first on NBC NEWS

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!



Pavel Durov, the founder of Telegram, has received a generous donation from over half a million players of the viral Telegram-based clicker game called...


The crypto industry has made a record $94 million in political donations since 2023 in an effort to support pro-crypto governance. According to a...


As the Floki (FLOKI) bulls eye a quick 50% rally from current levels around $0.00021 to yearly highs above $0.00031 after a key technical...


Bank of America (BAC) upgraded its rating on Coinbase (COIN) shares from underperform to neutral on Friday and raised its price target for Coinbase to...


In a major move, Turkey drafted a crypto bill, tabled by the ruling party (AK Party) Group Chairperson Abdullah Güler on May 16, to...


Hong Kong became the first region outside mainland China to allow users to open digital wallets and hold China’s CBDC e-CNY, otherwise known as...

You May Also Like

Financial Advisors


Financial Advisors


Financial Advisors

The humongous outbreak of the dreaded coronavirus has brought about a groundbreaking change in what the world perceived as ‘normal’. With an estimated 280,391,189...

Disclaimer: Respect, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2024 Respect Investment. All Rights Reserved.