- Tesla requests reaffirmation of Elon Musk’s $56 billion compensation
- Compensation linked to Tesla’s market value reaching $650 billion
- Delaware judge dismissed Musk’s compensation, nullifying generous package
On Wednesday, Tesla requested that its shareholders reaffirm their approval of CEO Elon Musk’s unprecedented $56 billion compensation, established in 2018 but subsequently denied by a Delaware judge in January.
In lieu of a salary or cash incentive, the compensation is contingent on Tesla’s market value increasing to a maximum of $650 billion within the following decade. Tesla is valued at more than $500 billion, per LSEG data.
Kathleen McCormick of the Delaware Court of Chancery dismissed Musk’s compensation, describing it as “an incomprehensible sum” that was deemed unjust to the company’s shareholders.
The appealable January ruling nullified the most generous compensation package in corporate America.
The letter included in the regulatory filing stated, “We do not agree with the Delaware Court’s decision, and we do not believe that what the Delaware Court said is how corporate law should or does operate.” The letter was signed by the board chairperson, Robyn Denholm.
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Judge McCormick also presided over Twitter’s July 2022 lawsuit against the entrepreneur, who attempted to breach his $44 billion contract to acquire the social media platform.
According to the filing, Musk received no compensation for 2023. Instead of a salary, the billionaire gets compensation from the corporation through stock options.
“We recommend simply subjecting the original 2018 package to a new shareholder vote if it is legally prudent,” Tesla stated in its filing.
Additionally, in a regulatory filing, the electric vehicle manufacturer urged its shareholders to support its choice to change its state of incorporation from Delaware to Texas.
Before the bell, shares of the most valuable automaker in the world were up 1%.
