Tesla Shareholders to Vote on CEO Elon Musk Pay, Texas Incorporation

Tesla asked shareholders to vote on Chief Executive Elon Musk’s $55.8 billion pay package that was previously struck down by a Delaware court.

The company is also seeking to incorporate in Texas from Delaware.

The electric-vehicle maker ahead of its annual shareholder meeting proposed shareholders ratify Musk’s 2018 pay package, which consisted of a 10-year grant of stock options with 12 potential vesting tranches.

The package was struck down in a court decision after a suit alleged Musk controlled the approval process and that the board misled investors. The judge in the case, Chancellor Kathaleen McCormick, found that the process for securing approval of Musk’s compensation was “deeply flawed,” and agreed to rescind the CEO’s package, which was valued at a maximum of $55.8 billion.

Musk is also asking shareholders to approve the company’s corporate conversion to Texas from Delaware. “2024 is the year that Tesla should move home to Texas,” according to the filing. “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 favor of taking Tesla to our business home of Texas.”

In February, Musk asked Tesla to decide whether to incorporate in Texas, after a Delaware court ordered him to give up his compensation package, The Wall Street Journal reported. At the time, “The public vote is unequivocally in favor of Texas,” Musk said in a post on X. “Tesla will move immediately to hold a shareholder vote,” he said after conducting a poll on the platform.

The company said the move would not move jobs or facilities out of Austin, Texas.

Other proposals on Tesla’s agenda call for the election of two directors, Kimbal Musk and James Murdoch, to the board. The annual shareholder meeting is being held on June 13.

Tesla’s upcoming vote comes as the company faces one of the more challenging periods in its history. After years of steady growth as demand for its vehicles took off, the EV market has cooled as interest rates remain higher around the world due to elevated levels of inflation.

Write to Denny Jacob at [email protected]