Musk needs a $46 billion pay plan to stay motivated

CNN

Tesla Board Chairperson Robyn Denholm urged shareholders to re-approve CEO Elon Musk’s $46 billion pay package this week, saying the vote is “not about the money” while suggesting that Musk could leave Tesla or devote less time to the company if he isn’t properly compensated.
Musk’s pay plan was nullified by a Delaware Court of Chancery ruling in January 2024 after a lawsuit filed by a shareholder.
Musk’s pay plan “is the largest potential compensation opportunity ever observed in public markets by multiple orders of magnitude—250 times larger than the contemporaneous median peer compensation plan and over 33 times larger than the plan’s closest comparison, which was Musk’s prior compensation plan,” the court ruling noted.
Tesla’s board subsequently asked shareholders to approve a transfer of Tesla’s state of incorporation from Delaware to Texas and to reinstate the pay plan, which was previously estimated to be worth $56 billion but was more recently valued at $46 billion.
A survey found that more than 80 percent of early votes were in favor of Musk’s pay package, despite some shareholders’ vocal opposition.
Lawsuit slams Musk’s “strong-arm, coercive tactics” The pay plan and Texas move are also being challenged by a new shareholder lawsuit filed in the same Delaware court that nullified the 2018 pay package.
Donald Ball, who owns 28,245 shares of Tesla stock, yesterday filed a lawsuit against Tesla, Musk, Denholm, and other board members.
The lawsuit also alleges that the Tesla board has not “disclosed a complete or fair picture” to shareholders on the impact of re-approving Musk’s pay plan.

NEGATIVE

This week, Robyn Denholm, the chairperson of the Tesla Board, asked shareholders to reapprove CEO Elon Musk’s $46 billion compensation package. She stressed that the vote is “not about the money” and hinted that Musk might leave the company or stop contributing as much if he isn’t paid fairly.

Clearly, this has nothing to do with money. We all know that Elon is among the richest persons on the planet, and he would continue to be so even if Tesla were to break the promise it made to its shareholders in 2018,” Denholm stated in a letter dated June 5.

Following a lawsuit from a shareholder, Musk’s pay plan was declared void by the Delaware Court of Chancery in January 2024. According to the verdict, Denholm “derived the vast majority of her wealth from her compensation as a Tesla director” and took a “lackadaisical approach to her oversight obligations”. Additionally, it claimed that the proxy information provided to shareholders prior to the 2018 vote was “materially deficient” and that the majority of board members “were beholden to Musk or had compromising conflicts.”. “.

According to the court ruling, Musk’s pay plan “is the largest potential compensation opportunity ever observed in public markets by multiple orders of magnitude—250 times larger than the contemporaneous median peer compensation plan and over 33 times larger than the plan’s closest comparison, which was Musk’s prior compensation plan.”.

Following that, the board of Tesla requested that shareholders approve the change of Tesla’s state of incorporation from Delaware to Texas as well as the reinstatement of the pay plan, which was valued at $46 billion most recently after being estimated to be worth $56 billion earlier. Prior to Tesla’s June 13 annual meeting, votes can be cast. Despite strong opposition from some shareholders, a survey revealed that over 80% of early votes supported Musk’s compensation package.

Sue denounces Musk’s “coercive, strong-arm tactics.”.

A fresh shareholder lawsuit, filed in the same Delaware court that invalidated the 2018 pay package, is also contesting the pay plan and the Texas move. Owner of 28,245 shares of Tesla stock, Donald Ball, filed a lawsuit against Musk, Denholm, and other board members yesterday.

According to the Ball lawsuit, Musk said in January 2024 that if he didn’t get 25 percent of the vote, he “would prefer to build products outside of Tesla.”. The report further mentions that Musk has instructed Nvidia to ship thousands of AI chips that were set aside for Tesla to X and xAI, thereby delaying Tesla’s capacity to expand its data center and AI infrastructure by multiple months. “.”.

According to the lawsuit, Musk used coercive and strong-arm tactics to win stockholder approval for both the ratification and the redomestication votes.

The lawsuit further claims that the impact of re-approving Musk’s pay plan has not been “disclosed a complete or fair picture” to shareholders by the Tesla board. “Tesla’s pre-tax profits for the last two years could be wiped out due to radical tax implications,” the lawsuit claimed. “.”.

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