Tesla's general counsel has announced that its shareholders recently approved a multibillion-dollar compensation package for its CEO, Elon Musk. The shareholders also approved moving the company's incorporation from Delaware to Texas.
Nonetheless, Musk's compensation package remains an issue in ongoing litigation in Delaware. Earlier this year, the Delaware Court of Chancery rejected Musk's proposed compensation package based on disclosure failures, unclear terms, conflicts of board members, and Musk's unfair influence. For instance, Musk made last-minute changes to the timeline or substantive provisions of the compensation package just before six of the ten meetings at which the board discussed it. Musk also has demonstrably close ties to multiple board members.
In her decision, Chancellor Kathaleen St. J. McCormick noted that the proposed package was "the largest compensation plan in the history of public markets." Estimates of the plan's total value have ranged from $47 to $56 billion.
Institutional stockholders and retail investors have divided opinions about the plan and the attorney fee award in the case. Norway's $1.6 trillion sovereign wealth fund stated it would vote its share against Musk's compensation package. The California Public Employees Retirement System, the country's largest public pension fund, came out against a proposed $5 billion-plus fee for the stockholder attorneys who blocked Musk's plan.
To further complicate matters, a proposed class action lawsuit was filed against Musk and Tesla in June, contesting the simple majority standard Tesla used to move its domicile to Texas. According to the suit, Tesla's certificate of incorporation requires a two-thirds or better majority vote for the move.
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