Tesla Seeks Shareholder Vote to Relocate to Texas and Reapprove Elon Musk’s $56 Billion Pay Package

Tesla has filed its proxy statement and will ask shareholders to relocate its state of incorporation from Delaware to Texas and reapprove CEO Elon Musk’s compensation plan at its 2024 Annual Shareholder Meeting, scheduled for June 13, 2024.

Earlier this year a Delaware judge sided with shareholders challenging the legality of Musk’s $56 billion pay package. The court concluded that Tesla’s board had governance issues and had not adequately communicated details to shareholders when presenting the compensation plan, effectively invalidating the vote on Musk’s remuneration, which consisted mainly of stock options and required him to meet ambitious performance targets.

In response, Tesla has argued that the Delaware ruling was not only flawed but also ignored key evidence. The company suggests that the court’s decision undermines the original intent of Tesla’s shareholders, who had approved Musk’s package by a significant majority in 2018. Musk, expressing discontent with the Delaware court system, proposed the move to Texas as a more favorable business and regulatory environment.

The upcoming shareholder vote will also revisit Musk’s compensation package. If approved again, it would potentially negate a significant legal payout in shares, roughly estimated at $6 billion, to the attorneys of the shareholders who contested the initial pay agreement.

Ahead of the Annual Shareholder Meeting, Tesla will host its Q1 2024 earnings call next week on April 24. The call should be one of the most interesting in recent years after the drop in quarterly production and deliveries, the announcement of layoffs affecting more than 10% of the company, and Musk’s decision to prioritize development of the robotaxi ahead of the $25K car.

You can read the full filing below.

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