A judge in Delaware, where Tesla is incorporated, determined in January that part-time CEO Elon Musk’s $56 billion compensation package was against the best interests of the company’s many investors, nullifying the “performance-based” award. The package, which was approved by the crony-packed Elon-tied board back in 2018, is back up for vote again among shareholders, Bloomberg reports. This vote comes as Tesla falls deeply short of projected Q1 sales, fires 10 percent of its staff, and its share value has fallen nearly 37 percent so far this year.
Chief Judge Kathaleen St. J. McCormick called the company’s directors “supine servants of an overweening master” in her statement denying Musk’s payout. Tesla Chair Robyn Denholm criticized the court’s decision, saying the judicial system was second-guessing the will of Tesla shareholders, who had approved Musk’s pay structure in 2018.
“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,” Denholm wrote.
Tesla claims that many institutional and individual shareholders have already expressed support for reinstating Musk’s windfall. Negotiating a new package for the company CEO would allegedly take too long and potentially cost the company additional billions, according to the new filing. By overturning the judge’s decision with a new vote on the 2018 package, the company could “avoid a prolonged period of uncertainty” in regards to Musk, calling him “Tesla’s most important employee.”
Meanwhile, Tesla is following through on Musk’s threats to pull the company’s Delaware incorporation. Investors will also be expected to vote on the issue of incorporating Tesla in Texas, where it is now headquartered. Because of the Delaware decision to revoke Musk’s pay package, he has already taken his toys (SpaceX and Neuralink) and gone home (moving their incorporation recoreds to Texas and Nevada respectively.)
Has investor sentiment changed about Elon Musk since 2018? I am willing to bet that it has. Especially after many of these investors have lost significant amounts of value on their Tesla shares since January.