Tesla Board Chairperson Robyn Denholm has called on shareholders to re-approve CEO Elon Musk’s $46 billion compensation package, stating the necessity of the plan to maintain Musk’s engagement with the company. In a letter to shareholders on June 5, Denholm emphasized that the vote is “not about the money” and suggested that Musk might leave or reduce his involvement at Tesla if not properly incentivized.
Musk’s pay package was nullified in January 2024 by a Delaware Court of Chancery decision following a shareholder lawsuit. The court’s ruling criticized Denholm’s oversight and noted conflicts of interest among board members, describing the proxy information provided in the 2018 vote as “materially deficient.” The court further noted that Musk’s compensation plan was “the largest potential compensation opportunity ever observed in public markets.” Read more about the court’s decision here.
Despite the ruling, Tesla’s board has urged shareholders to approve the pay plan again, now valued at $46 billion. A survey indicated that more than 80 percent of early votes supported the package, although some shareholders remain opposed. Votes can be submitted ahead of Tesla’s annual meeting on June 13. Additional details here.
The compensation plan and a proposed move of Tesla’s state of incorporation to Texas are currently being challenged in a new lawsuit filed in the Delaware court. Plaintiff Donald Ball, a Tesla shareholder, accused Musk of using “strong-arm, coercive tactics” to secure approval for the controversial vote. The lawsuit raises concerns about Musk’s diversion of resources from Tesla to other ventures, and it also warns of potential “radical tax implications” for the company.
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