Tesla Asks Shareholders To Re-Approve Elon Musk’s $56B Pay Package

Tesla ( TSLA ) shareholders will vote on a number of issues at the electric vehicle (EV) maker’s annual shareholder meeting in June, including whether to re-approve Chief Executive Officer (CEO ) Elon Musk’s massive compensation deal.

Earlier this year , a Delaware judge called the package “excessive,” siding with an investor who had sued Tesla over the idea that Musk was worth a $55.8 billion pay package.

Musk’s $55.8 Billion Pay Package

Board chair Robyn Denholm wrote in a proxy statement filed with the Securities and Exchange Commission (SEC ) Wednesday that the Delaware judgment “second-guessed” the will of Tesla shareholders, and said the board continues to stand behind the pay package it originally approved in 2018.

“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. “So we are coming to you now so you can help fix this issue—which is a matter of fundamental fairness and respect to our CEO.”

The company argues in the proxy that Musk has effectively not been paid for the last six years of his work at Tesla, and that various provisions like holding periods before he could sell any vested stock and performance goals for the company incentivize Musk to continue working to make Tesla a more valuable company.

In January, the Delaware court said the package was excessive because it was “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.”

Tesla said that “dozens” of institutional investors have expressed their support for the compensation package since the Delaware court’s decision, with four of the top 10 shareholders meeting with Tesla’s board to discuss the ruling since it was issued Jan. 30.

Appealing the decision or devising a new package entirely could take months and cost the company additional millions of dollars, which is why the board said it preferred to simply re-approve the 2018 package to address concerns that it was not in the best interest of the company and the shareholders the first time.

Analysts Say ‘Clock Has Struck Midnight,’ Time for Tesla To Give Growth Plans

Wedbush analysts said in a Wednesday note that they expect the package to be re-approved, and that the Delaware ruling would be effectively rendered irrelevant if Tesla reincorporates in Texas.

However, they also said the “clock has struck midnight” for Musk and Tesla to explain recent decisions like layoffs , in addition to providing a plan for Tesla’s continued growth and areas of focus, like whether the company is truly abandoning a lower-cost “Model 2” that has been a company goal for years, or if it wants to focus on other projects like the fully autonomous “ robotaxi ” Musk wants to build.

Shareholders Also To Vote on Reincorporating in Texas, Re-electing Board Members

Shareholders will also have the chance to vote on a number of other issues, including whether to move Tesla’s incorporation to Texas—where Musk has moved operations for several of his other companies—from Delaware, as well as the re-election of two board directors: Musk’s brother, Kimbal, and James Murdoch, son of media mogul Rupert Murdoch.

Other issues that will be voted on at the June 13 shareholder meeting include proposals to reduce director terms to one year, to allow unionization efforts, and to commit to a moratorium on sourcing materials from deep-sea mining, according to the SEC filing.

Tesla stock has been battered so far this year, losing more than a third of its value since 2024 began. Shares were down about 1.8% to $154.22 as of 10:53 a.m. ET Wednesday.