AUSTIN, Texas (AP) \u2014 Tesla will ask shareholders to reinstate a $56 billion compensation package for CEO Elon Musk that was\u00a0rejected by a judge in Delaware\u00a0this year and to move the electric car maker\u2019s corporate home from Delaware to Texas.<\/p>\n\n\n\n
In a filing with federal regulators early Wednesday, the company said it would ask shareholders to vote on both issues during its annual meeting on June 13.<\/p>\n\n\n\n
In January, Chancellor Kathaleen St. Jude McCormick ruled that Musk is not entitled to a landmark compensation package awarded by Tesla\u2019s board of directors that is potentially worth about $55.8 billion over 10 years starting in 2018.<\/p>\n\n\n\n
Five years ago, a Tesla shareholder lawsuit alleged that the pay package should be voided because it was dictated by Musk and was the product of\u00a0sham negotiations\u00a0with directors who were not independent of him.<\/p>\n\n\n\n
Musk\u00a0said a month after the judge\u2019s ruling\u00a0that he would try to move Tesla\u2019s corporate listing to Texas, where he has already moved company headquarters.<\/p>\n\n\n\n
Almost immediately after the judge\u2019s ruling, Musk\u00a0did exactly that with Neuralink, his privately held brain implant company, moving its corporate home from Delaware to Nevada.<\/p>\n\n\n\n
In a letter to shareholders this week, Chairperson Robyn Denholm said that Musk has delivered on the growth it was looking for at the automaker, with Tesla meeting all of the stock value and operational targets in a 2018 CEO pay package that was approved by shareholders.<\/p>\n\n\n\n
\u201cBecause the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value,\u201d Denholm wrote. \u201cThat strikes us\u2009\u2014\u2009and the many stockholders from whom we already have heard\u2009\u2014\u2009as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it.\u201d<\/p>\n\n\n\n
Tesla posted record deliveries of more than 1.8 million electric vehicles worldwide in 2023, according to a regulatory filing. But the value its shares has eroded quickly this year as\u00a0sales of electric vehicles soften.<\/p>\n\n\n\n
Future growth is in doubt and it may be a challenge to get shareholders to back a fat pay package in an environment where competition has increased worldwide and demand for electric vehicle sales is fading. Shareholders also will be asked to cast a nonbinding advisory vote on future executive compensation.<\/p>\n\n\n\n
Tesla\u2019s shares have lost more than one third of their value this year as massive price cuts have failed to draw more buyers. The\u00a0company\u00a0said it delivered 386,810 vehicles from January through March, nearly 9% fewer than it sold in the same period last year.<\/p>\n\n\n\n
At the time of the Delaware court ruling, Musk\u2019s package was worth more than $55.8 billion, but the court may have cost the mercurial CEO over $10 billion due to the company\u2019s stock slide this year. The filing said Musk\u2019s 2018 compensation was worth $44.9 billion at the close of trading on April 12.<\/p>\n\n\n\n
Since last year, Tesla has\u00a0cut prices as much as $20,000\u00a0on some models. The price cuts caused used electric vehicle values to drop and clipped Tesla\u2019s profit margins.<\/p>\n\n\n\n
This week, Tesla said it\u00a0was letting about 10% of its workers go, about 14,000 people.<\/p>\n\n\n\n
In the filing, Tesla\u2019s board wrote that the decision to seek shareholder approval of Musk\u2019s 2018 pay package was made by the board after it received a report from a special committee of one board member, Kathleen Wilson-Thompson.<\/p>\n\n\n\n
The board wrote that if there is any significant vote against future executive pay packages, \u201cwe will consider our stockholders\u2019 concerns, and the compensation committee will evaluate whether any actions are necessary to address those concerns.\u201d<\/p>\n\n\n\n
Shares of Tesla Inc., which slid another 8% this week, were down slightly in trading just after Wednesday\u2019s opening bell.<\/p>\n","protected":false},"excerpt":{"rendered":"
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