Tesla CEO Elon Musk in line for an $87 billion payday

Tesla is asking its shareholders to once again approve a US$56 billion (A$86.9bn) pay package for company CEO Elon Musk, and back the electric vehicle giant’s proposed corporate move to Texas.

Tesla will ask its shareholders to vote on the pay package at a June 13 annual meeting.

A Delaware judge blocked the stock compensation package in January 2024, almost six years after the performance-based award had been approved by Tesla shareholders in 2018.

The package would see Mr Musk paid US$56 billion (A$86.9bn) across a 10-year period.

When it was originally approved by Tesla’s shareholders, the company’s shares were worth less than US$25. Now they are worth US$150 each, and Tesla has become the largest EV manufacturer in the world.

Tesla CEO Elon Musk in line for an $87 billion payday

The Delaware Chancery Court claimed Tesla’s board hadn’t acted in the best interests of the company when it approved the pay package, saying there was “barely any evidence of negotiations at all”.

Some large US corporations such as Tesla and Facebook are incorporated in Delaware due to its lax taxation approach towards companies which don’t do business in the state.

In a letter submitted to the US Securities and Exchange Commission, Tesla Chairperson Robyn Denholm called for the brand’s shareholders to once again approve the pay package without amendments, claiming Mr Musk has more than delivered on his promises to the company.

“In 2018, we asked for unbelievable growth and accomplishments. Elon delivered: Tesla’s stockholders have benefited from unprecedented growth under Elon’s leadership and Tesla has met every single one of the 2018 CEO pay package’s targets,” Ms Denholm’s letter read.

“The Board stands behind this pay package. We believed in it in 2018, as we asked Elon to pursue remarkable goals to grow the company. You, as stockholders, also believed in it in 2018 when you overwhelmingly approved it. Time and results have only shown the wisdom of our judgement.

“We do not agree with what the Delaware Court decided, and we do not think that what the Delaware Court said is how corporate law should or does work. So we are coming to you now so you can help fix this issue – which is a matter of fundamental fairness and respect to our CEO.

“We are asking you to make your voice heard — once again — by voting to approve ratification of Elon’s 2018 compensation plan.”

Ms Denholm also urged shareholders to vote in favour of a proposed move to incorporate the company in Texas – which would be aligned with its new headquarters in Austin.

“2024 is the year that Tesla should move home to Texas,” the filing continued.

“We have a significant number of manufacturing, operations, and engineering employees in Texas, and our executives are based there.

“Texas is where we should continue working towards our mission of accelerating the world’s transition to sustainable energy, as we lay the foundation for our growth with our ramp and build of factories for our future vehicles and to help meet the demand for energy storage as well as with our progress in artificial intelligence via full self-driving and Optimus.

“We have received letters from thousands of Tesla stockholders – large and small – supporting a move home to Texas. We have heard you, and now we formally ask that you speak in a meaningful way: and vote in favour of taking Tesla to our business home of Texas.”

The news of Tesla wanting to move its entire corporate operations to Texas comes just a handful of days after a memo reported by overseas publications said the carmaker would cut 10 per cent of its workforce globally.

Tesla also reported its lowest quarterly sales since 2022 to open 2024, in a rare instance of sales shrinking rather than growing.

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