Tesla is once again seeking approval from shareholders for CEO Elon Musk’s colossal $56 billion compensation package

Tesla is once again seeking approval from shareholders for CEO Elon Musk’s colossal $56 billion compensation package, initially set in 2018 but rejected by a Delaware judge earlier this year. This move precedes Tesla’s quarterly earnings report next week, amid challenges such as weakened demand and concerns about Musk’s controversial statements in the past year.

The re-vote comes amid scrutiny over Musk’s compensation and his influence within Tesla’s board, which includes his brother Kimbal Musk. Tesla’s board is utilizing a section of Delaware law to rectify the previously rejected compensation plan, a process that has raised legal uncertainties.

The compensation package, touted as the largest in corporate America, hinges on Tesla’s market value reaching up to $650 billion over the next decade. However, Tesla’s shares fell nearly 2% following the announcement, potentially impacting its market value.


If shareholders approve the compensation plan, it won’t automatically translate into payouts for Musk. Legal experts suggest that while approval may address procedural flaws in the 2018 vote, Musk would need to appeal the court’s findings that he wielded undue influence over the negotiation process.
Musk’s appeal is expected later this year, pending the trial court’s decision on legal fees. Meanwhile, Tesla’s proposal to shift its state of incorporation from Delaware to Texas adds another layer of complexity to its ongoing tussle with the state of Delaware.

In addition to these legal battles, Tesla faces mounting concerns over its stock performance, which has plummeted over 36% this year amidst slowing electric vehicle sales globally. Analysts express skepticism over Tesla’s strategy, particularly regarding its decision to scrap plans for an affordable EV and lay off a significant portion of its workforce.

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