Tesla rejects $56bn pay deal for Elon Musk

Tesla rejects $56bn pay deal for Elon Musk

Tesla is again seeking to give boss Elon Musk the biggest pay deal in American corporate history, worth $56bn (£44.9bn).

The electric vehicle (EV) company is asking shareholders to vote on the record-breaking pay of its chief executive set in 2018.

However, the deal was rejected by a US judge in January who described it as an “unfathomable sum”.

It comes just days after Musk announced plans to cut more than 10% of his global workforce.

In a memo issued to staff Musk said there was nothing he hated more, “but it had to be done”.

Now, his remuneration is in the spotlight – although the proposed compensation does not include salary or bonuses.

Instead, the 2018 agreement set a reward based on Tesla’s market value rising to as much as $650bn over 10 years. Stock in the EV company is now worth $500.36bn, according to the data.

At the time her Delaware-based judge, Judge Kathaleen McCormick said the pay deal was unfair to shareholders.

He found Tesla directors, who negotiated the deal, were “probably starry-eyed” because of Mr Musk’s “superstar appeal” and did not fully inform shareholders.

The decision angered Mr. Musk, who later threatened to move Tesla’s headquarters from Delaware to Texas.

On Monday, Tesla filed paperwork asking shareholders to approve the move and sign off on another 2018 pay package.

Board chairwoman Robyn Denholm wrote in a letter included in the regulatory filing: “Elon has not been paid for any of his work for Tesla over the past six years… That surprises us, and many shareholders we’ve heard from, as fundamentally unfair. ”

Ms. Denholm also maintained that the board did not agree with the court’s decision. “We don’t think that what the Delaware Court says is how corporate law should or should work,” he said.

Musk’s compensation for 2023 will be $0, the filing shows, because the billionaire does not take a salary from the company and is compensated through stock options.

“If legally advisable, we recommend only subjecting the original 2018 package to a new shareholder vote,” Tesla said, adding that it still plans to appeal the decision.

The re-voting comes at a difficult time for the company, which is seeing its fewest EV deliveries since 2022. The weak demand comes ahead of its quarterly earnings due next week.

Musk is also trying to restore his reputation after a turbulent year. Tesla has had to recall cars over safety concerns, Mr Musk is embroiled in an antisemitic conspiracy controversy and has had repeated problems with X, his social media platform.

However, Bloomberg and Forbes estimate Musk’s net worth to be between $198bn and $220bn in November 2023, making him the richest person in the world.