Tesla will ask shareholders to reinstate CEO Elon Musk’s $56 billion (£45 billion) pay package, which a Delaware judge voided earlier this year, just days after the company announced It was cutting 14,000 jobs.
In a proxy filing issued on Wednesday, Tesla also said it would ask shareholders to approve moving the company’s incorporation from Delaware to Texas. Musk had suggested the move after his pay package was ruled illegal by a judge in January.
Tesla Chair Robyn Denholm criticized the court's decision in Wednesday's proxy filing, saying it created a “fundamental problem for the company.” Writing to investors, Denholm said: “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."
READ MORE:Judge says Elon Musk must give up more than £44 billion of Tesla pay package
According to Tesla Chair Robyn Denholm, Musk has not been paid for his Tesla work for years (Getty Images)Musk's pay package was struck down in court after shareholder Richard Tornetta took legal action against the billionaire and the Tesla board over the huge amount that shareholders voted to pay the Tesla CEO. The package won approval from more than 70 per cent of Tesla shareholders but the lawsuit argued that many of those shares belonged to people closely tied to Musk.
Elon Musk makes history by becoming the first person in the world to lose $200bn
The court ruled against Musk in January, calling his pay package "unfair," and agreeing with Tornetta that the tech mogul had too much control over setting the rules and the share price. The decision prompted Musk to say: “Never incorporate your company in the state of Delaware.”
The request comes just days after Tesla announced it would be laying off 10 per cent of its work force (Getty Images)The court's decision was criticized again on Wednesday, with Tesla claiming that the judge "ignored material evidence presented at trial and that the Delaware Court made errors of fact and incorrect conclusions of law.” The company also noted that “dozens of institutional stockholders” have told Tesla that they disagree with the Tornetta decision.
The proxy filing came two days after Tesla announced it would be laying off more than 10% of its global workforce, equivalent to at least 14,000 roles. It remains unclear where these cuts will occur within the company.
Musk hit out at Delaware after the decision over his pay (POOL/AFP via Getty Images)Chief executive Elon Musk announced “the difficult decision” in a memo first reported by the online publication Elektrek, writing that Tesla had grown rapidly in recent years and as a result there had been duplication of roles and job functions in certain areas. Referring to the job cuts, he wrote: “There is nothing I hate more, but it must be done. This will enable us to be lean, innovative and hungry for the next growth phase cycle.”
Tesla had its first fall in deliveries in nearly four years in the first quarter of 2024, missing market expectations by about 13%. The company cited production problems caused by unforeseen factors such as attacks on shipping in the Red Sea and an arson attack on its factory in Berlin, but the figures also pointed to a softening in global demand.
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