Elon Musk's Compensation Plan Nullified by Delaware Law Reintroduced
Tesla's Corporate Relocation to Texas Also Put to Vote
Earlier this year, Tesla will hold a shareholder vote to reapprove the $56 billion (approximately 77.6 trillion KRW) compensation package for CEO Elon Musk that was invalidated by a Delaware court.
On the 17th (local time), Tesla announced through proxy documents issued on that date that it will also hold a shareholder vote on moving the company’s incorporation from Delaware to Texas. The annual shareholder meeting where the vote will take place is scheduled for June 13.
This follows the Delaware court’s acceptance in January of a minority shareholder’s lawsuit claiming Musk’s compensation package was excessive and invalid. Previously, Tesla’s board approved the $56 billion compensation package for Musk in 2018. Subsequently, a minority shareholder filed a lawsuit in October 2022 to invalidate the package, and the Delaware court sided with the shareholder, ruling that the board acted more like Musk’s advisory body rather than negotiating salary terms independently.
Immediately after the ruling, Musk stated, “Never incorporate a company in Delaware.”
He then conducted a poll on his social media platform X (formerly Twitter) asking whether Tesla should move its incorporation to Texas. A few months later, Tesla’s board decided to relocate the incorporation to Texas and proceed with a shareholder vote.
Additionally, in February, Musk moved the incorporation of his space company SpaceX to Texas and the neuroscience startup Neuralink to Nevada.
Meanwhile, Tesla recently announced plans to cut more than 14,000 employees, about 10% of its global workforce, due to sluggish electric vehicle sales. Tesla’s vehicle deliveries in the first quarter of this year fell 8.5% year-over-year to 386,810 units, marking the first decline in four years since 2020.
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