After Judicial Tyranny, Tesla Asks Shareholders To Approve Musk's $56 Billion Comp... Again

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by Tyler Durden
Wednesday, Apr 17, 2024 - 02:05 PM

At his peak, Elon Musk was worth $340BN (Nov 2021) and stood alone as the world's richest man/women/other. According to Bloomberg's billionaires list, he is now worth mere $175BN... sliding to just the fourth-richest in the world as Tesla's share price has declined and after a Delaware judge decided in January that Musk was just paid too damn much for creating a $1.2 trillion company by Nov 2021.

But now, he may be about to climb that wealth ladder back to the top once more as Tesla has asked shareholders to vote again on the same $56 billion compensation package that was voided by a Delaware court early this year.

Tesla Chair Robyn Denholm criticized the Delaware Chancery Court’s January decision, writing in the proxy that it amounted to second-guessing shareholders who had approved Musk’s performance-based award 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.

The filing went on to say that negotiating a new pay package would take time and lead to incurring billions of dollars in additional compensation expense.

Therefore, ratifying the 2018 package will be faster and “avoid a prolonged period of uncertainty regarding Tesla’s most important employee.”

Additionally, the filing shows Tesla considered nine other states as alternatives to Delaware before narrowing its choice down to California, Nevada, New York or Texas.

It settled on the state where it’s headquartered and is home to its newest EV plant.

“Tesla is all-in on Texas,” the company said.

“Tesla’s corporate identity is increasingly intertwined with Texas.”

Finally, Bloomberg reports that, according to the filing, dozens of institutional shareholders have contacted Tesla and expressed support for the 2018 compensation plan, including four of the top 10. The carmaker also said that thousands of retail investors have sent letters and emails to the board expressing the same sentiment.

Of course, if this passes the shareholder vote, we assume the honorable Chief Judge Kathaleen St. J. McCormick - who described the company’s directors as “supine servants of an overweening master” - will have problems asserting that they hadn’t looked out for the best interests of investors... since it was the investors themselves, now fully informed, that democratically voted for Musk's compensation plan.

...or does democracy (and capitalism) die in Delaware?