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Tesla asks shareholders to reinstate Musk’s $56 billion pay package and approve move to Texas

Tesla (TSLA) filed its proxy statement ahead of the EV maker’s June 13 shareholder meeting with two big requests: that shareholders vote to move Tesla’s incorporation status to Texas and that they ratify CEO Elon Musk’s 2018 pay package that a Delaware judge revoked earlier this year. year.

In her letter to shareholders in the proxy statement, Tesla Chairman Robyn Denholm said the time is right for Tesla to move its headquarters to Texas, where the company has been headquartered since December 2021.

“2024 is the year Tesla would move to Texas. We ask for your vote to approve Tesla’s move from Delaware, our current state of incorporation, to a new legal home in Texas. Texas is already our home base and we are committed to it,” she said.

The decision to move Tesla’s incorporation status came after a Delaware court revoked Musk’s pay package, finding it was awarded to Musk by a board that did not act “in Tesla’s best interests” and “barely any had proof’. of the negotiations at all.” Musk’s 2018 pay package was worth about $56 billion.

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Elon Musk attends the Breakthrough Prize Awards in Los Angeles, California, US, April 13, 2024. REUTERS/Mario Anzuoni

Elon Musk attends the Breakthrough Prize Awards in Los Angeles, California, US, April 13, 2024. REUTERS/Mario Anzuoni (REUTERS/Reuters)

“Never incorporate your company in the state of Delaware,” Musk says said at X after the verdictand added, “I recommend incorporating in Nevada or Texas if you prefer shareholders to decide things.”

As for Musk’s pay package, Denholm wrote that restoring the full 2018 pay package was the right thing to do.

“In 2018, we asked for incredible growth and performance. Elon has delivered: Tesla shareholders have benefited from unprecedented growth under Elon’s leadership, and Tesla has met all 2018 CEO compensation package targets,” said Denholm. When the compensation plan was previously voted on, more than 70% of Tesla shareholders approved it.

Denholm also noted that Musk’s compensation package “built further incentives in favor of Tesla shareholders” by requiring Musk to hold onto the shares he received upon exercising his options for five years, claiming that Musk would be encouraged to innovate further if its shares were locked up. .

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This didn’t stop Musk from selling large amounts of shares he owned before the 2018 stock awards he used to finance his purchase of Twitter (now X), to the ire of many shareholders.

That said, analysts including Wedbush’s Dan Ives think shareholders will vote in favor of the board’s recommendations.

“On the Comp package that was approved by shareholders back in 2018, this has been a point of contention among some investors, but we expect that the 2018 package will be reapproved and that the Delaware court ruling will be essentially moot will be, just like Tesla will. moving to Texas now,” he wrote in a note Wednesday morning, adding that he expects some “fireworks” at the June meeting, with investors concerned about the overall condition of the company.

Proxy advisory firms Glass Lewis and ISS (Institutional Shareholder Services) have not yet recommended whether shareholders should vote for or against the latest proposals, although the two companies have been critical of Tesla’s governance in the past.

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Finally, Tesla’s board is asking shareholders to re-elect current directors Kimbal Musk (Elon’s brother) and James Murdoch, among other proposals that will be put to a vote at this year’s meeting.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him Tweet and further Instagram.

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