Editor’s note: This story was updated with details from the stockholder letter, more background and a modified headline
EV giant Tesla, Inc TSLA is calling for its shareholders to vote once again on CEO Elon Musk’s invalidated pay package, worth $47 billion at current stock price levels.
What Happened: Among the various proposals up for shareholder vote at Tesla’s upcoming annual meeting are plans to switch the company’s state of incorporation from Delaware to Texas and to ratify Musk’s 2018 compensation package.
The pay package, worth $56 billion earlier, was nullified by a Delaware court earlier in January, as the judge deemed it an “unfathomable sum.” In response to the ruling, Musk expressed discontent with Delaware and announced plans to relocate the company’s incorporation to Texas, where Tesla is already headquartered.
New Letter: Tesla board Chairperson Robyn Denholm addressed stockholders in a letter, expressing dissatisfaction with the court’s decision and advocating for the reinstatement of Musk’s compensation plan.
"Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value,” she wrote. “That strikes us — and the many stockholders from whom we already have heard — as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it.”
Why It Matters: An overwhelming majority of stockholders voted for the package in 2018 and the board stands behind it as well, she added.
"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," Denholm wrote while also urging shareholders to reinstate their vote and approve ratification of Musk's 2018 compensation plan.
Tesla's annual meeting will be held on June 13, 2024, at 3:30 p.m. Central Time (CT).
The company’s first-quarter results are also due next week.
Price Action: Tesla shares closed down 2.7% on Tuesday but rose about 1% to 158.57 in premarket trading, as per data from Benzinga Pro.
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