The proposals come at a difficult time for Tesla.
New York:
Electric car maker Tesla will ask its shareholders to vote again on CEO Elon Musk’s $56 billion pay package that they approved in 2018 but was blocked by a U.S. court earlier this year .
Tesla Chairman Robyn Denholm said in a filing with federal regulators on Wednesday that the board supported the original proposal and believed the company’s “entrepreneurial spirit” had been an “opportunity for strong returns.” “One of the huge risks.”
Musk’s payout, which amounted to $55.8 billion in 2018, was invalidated in January by a Delaware court, which ruled based on a complaint from an individual shareholder alleging that Musk dictated his terms to the board, which is not sufficiently independent from its star CEO.
In a filing with the Securities and Exchange Commission, Denholm said the board continued to object to the court’s ruling, insisting it was not how corporate law “should or does” work.
“Elon has not been compensated for any of the work he has done for Tesla over the past six years, work that has helped Tesla achieve significant growth and shareholder value,” she wrote.
“This appalls us, and the many shareholders we have heard from, because it is fundamentally unfair and inconsistent with the wishes of the shareholders who voted for the bill.”
Denholm said in the filing that in a second proposal ahead of its June 13 shareholder meeting, the automaker is asking shareholders to support moving the company’s domicile from Delaware to Texas, where it is located. “Tesla’s home”.
Layoffs, drop in deliveries
The proposals come at a difficult time for Tesla, which has seen its shares fall 37% so far in 2024, while the S&P 500 has gained about 6% over the same period.
Earlier this week, Tesla announced it would lay off more than 10% of its global workforce.
The move comes after Tesla reported a drop in first-quarter vehicle deliveries, a decline seen as a reflection of increased competition among electric car makers and slowing demand growth in some markets.
Brian Dunn, a lecturer at Cornell University who specializes in compensation, said, “No truly independent board would offer a package of this magnitude to the CEO of a company that is clearly in trouble.”
Wedbush analyst Dan Ives chimed in: “Shareholders and shareholder meetings, combined with Tesla’s current situation, set the stage for more fireworks in the coming months.”
Ives said in a note that Musk needs to address market speculation that the company is shelving plans to sell mass-market electric vehicles at lower prices – a highly anticipated project often referred to as the “Model 2”.
“We believe not launching Model 2 within the next 18 months would be a disastrous gamble that could very well change Tesla’s growth story for the next few years,” Ives said.
Tesla shares closed down 1.06%.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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