Tesla on Wednesday asked its shareholders to once again approve CEO Elon Musk‘s record-breaking $56bn pay that was set in 2018. A Delaware judge rejected the pay package in January, calling it excessive and saying the company’s board failed to justify it.
The compensation includes no salary or cash bonus, but sets rewards based on Tesla’s market value rising to as much as $650bn over the next 10 years. Tesla is now valued at over $500bn, according to LSEG data.
Musk’s pay was rejected by Kathaleen McCormick of Delaware’s court of chancery, who termed the compensation granted by the board as “an unfathomable sum” that was unfair to shareholders.
The company’s request for a new vote is an apparent attempt to bolster support for Musk’s pay package and serve as a public rejection of the court’s decision. The January ruling, which can be appealed, had nullified the largest pay package in corporate America.
“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,” the board chairperson, Robyn Denholm, wrote in a letter included in the regulatory filing.
McCormick also oversaw Twitter’s July 2022 lawsuit against the entrepreneur when he tried to break his $44bn contract to buy the social media platform.
Musk’s compensation for 2023 was $0, the filing showed. The billionaire does not take a salary from the company and is compensated through stock options.
“If it is legally advisable, we suggest simply subjecting the original 2018 package to a new shareholder vote,” Tesla said in its filing.
The electric automaker also urged its investors in a regulatory filing to approve its decision to move the company’s state of incorporation from Delaware to Texas.
Shares of the world’s most valuable automaker were up 1% before the bell.
Tesla has struggled this year, failing to meet market expectations and reporting a fall in deliveries for the first time in four years. Musk announced earlier this week that he was laying off around 10% of the company’s global workforce – amounting to about 14,000 employees – amid the downturn in sales.
The overall electric car market has slowed in growth in recent months, as major manufacturers such as Ford scaled back their plans. Meanwhile, Apple laid off 600 employees this month after canceling its multibillion-dollar plan to develop a self-driving electric car.
