Certain shareholders of EV giant Tesla Inc (TSLA) are taking action by writing to the Delaware Court of Chancery regarding the nullification of the company CEO’s 2018 compensation package worth $56 billion. Elon Musk, the CEO of Tesla, has expressed his gratitude for their efforts.
What Happened:
Alexandra Merz, one of the shareholders, argued in a letter posted on X that she sees no financial benefit for herself in the court’s decision to invalidate Musk’s pay package. She has already requested Tesla’s board to reinstate a similar compensation package for the CEO.
In addition, Merz criticized the plaintiff’s counsel for requesting $6 billion in Tesla stock as compensation and suggested imposing a lengthy vesting period to protect the interests of small shareholders like herself.
Another shareholder, Kristen Netten, encouraged more shareholders to join the campaign, emphasizing the disproportionate representation of shareholders in the ruling and the insult of the lawyers requesting $6 billion in Tesla shares.
Musk Responds:
Musk took to X to thank the shareholders for their campaign, expressing his gratitude with a simple “Thanks :)” message.
Why It Matters:
The writing campaign, promoted under the hashtag #DelawareCourt81, follows a significant ruling by Delaware Court of Chancery judge Kathaleen McCormick, who nullified the 2018 pay package awarded to Musk due to insufficient independence of the board and unfairness to other shareholders. Musk is expected to appeal the decision.
The lawyers representing the plaintiff have requested $6 billion in Tesla shares for successfully challenging Musk’s pay, with pending approval by McCormick.
In conclusion, the actions of these shareholders highlight their concerns about corporate governance and fairness in compensation decisions. Musk’s response indicates his acknowledgment of their efforts, and the ongoing legal battle will likely have implications for Tesla and its stakeholders.
