Tesla has proposed that shareholders restore the bonus for company CEO Elon Musk in the amount of $56 billion, writes CNBC. In January, this payment was overturned by a court in the state of Delaware, calling the earlier decision on the bonus “deeply erroneous.”
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What is known
Tesla said the court's decision created a “fundamental problem for the company.” Previously, Judge Kathleen McCormick argued the decision to annul the award by arguing that at that time it was Musk who controlled the company, and not Tesla’s board of directors. According to the court, the compensation committee, instead of negotiating with Musk about the terms of the bonus deal, “worked with him almost as an advisory body.”
Tesla Chairman Robin Denholm said the company did not agree with a court decision. In addition, Tesla said it would ask shareholders to approve the transfer of the company's registration from Delaware to Texas, where the company's headquarters are currently located.
Bonus for Musk
A bonus totaling $56 billion from Tesla was approved by Musk in 2018. This became the largest compensation package from a public company in history.
The reward consisted of 12 tranches of options on Tesla shares, which were to go to Musk, provided that the automaker's capitalization increased by $50 billion and the company itself reached certain revenue goals.
However, that same year, Tesla shareholder Richard Tornetta demanded that the bonus be canceled, considering it unfair. Tornetta filed a corresponding lawsuit in court. A large investor, the California State Teachers pension fund, also criticized the deal. Retirement System (CalSTRS).
According to Business Insider, growing problems with Tesla's business have dealt a serious blow to Elon Musk's capital. If in November 2021 Musk occupied first place in the ranking of Bloomberg billionaires with a fortune of $340 billion, then at the close of trading on April 16, 2024, the billionaire’s assets were estimated at “only” $178 billion. Tesla quotes fell from a peak of $415 per share reached in 2021 by 62%. As of the end of trading on April 16, shares were already worth $157 per share.
At the beginning of the week, Tesla shares fell in price amid the automaker's decision to reduce its workforce by more than 10%. In December 2023, Tesla had just under 140.5 thousand employees, CNBC noted. Since the beginning of the year, Tesla shares have fallen in price by 36.77%. At trading on Wednesday, April 17, quotes fell by 1.38% to $154.95.