Tesla Faces Uphill Battle to Secure Elon Musk’s $56 Billion Pay Deal Approval, Says Chair

Tesla is currently encountering challenges in obtaining approval for Elon Musk's substantial $56 billion pay package, as mentioned by Tesla's chair. Robyn Denholm described the process of garnering the necessary votes as akin to conquering a daunting task like climbing "Mount Everest."

Delaware Judge's Objection

A Delaware judge had previously invalidated the proposed package, citing Musk's significant influence over the board members of Tesla.

Robyn Denholm's Perspective

Robyn Denholm emphasized the formidable challenge Tesla faces in securing approval for Elon Musk's historic $56 billion pay package. She likened the task of obtaining the required votes for ratifying Musk's compensation and relocating the company's legal entity to Texas to scaling "Mount Everest."

Denholm expressed, "It's a huge hill to climb because getting 50% of the shareholders to vote, let alone what they vote for, is quite tough."

Challenges Faced by Tesla

Tesla has been striving to gain shareholder endorsement for Musk's planned $56 billion remuneration package, which faced rejection by a Delaware judge earlier this year. The judge raised concerns about Musk's undue influence on Tesla's board, leading to an alleged "unfair price" due to his close relationships with multiple directors.

Musk's Response and Company Actions

Following the setback, Musk declared intentions to shift Tesla's incorporation from Delaware to Texas. He also disclosed plans to relocate SpaceX to Texas, advising other companies still incorporated in Delaware to consider moving promptly.

Denholm previously underscored the importance of Musk's proposed pay package to Tesla's future success.

Regarding Musk's potential departure if the compensation plan is not ratified, Denholm stated, "There is always a risk, but he's not holding a gun to anybody's head." She mentioned that Musk had not definitively indicated his intentions in this regard.

Tesla's Board Efforts

Tesla's board has been actively seeking to challenge the judge's ruling and push through the pay package. The company even resorted to paying for advertisements urging investors to vote in favor of the compensation scheme.

As per a filing with the Securities and Exchange Commission, Tesla disclosed funding for advertisements on Google and Musk's social media platform, X, despite traditionally shunning advertising practices.

Market Performance and Company Worth

Tesla's share price decline this year has further complicated the approval process. With a nearly 30% drop, the stock closed at approximately $175 on Thursday, reaching as low as $142. Despite this, the company retains a valuation close to $550 billion, although significantly lower than its value in late 2021.

Representatives for Tesla did not provide an immediate response to Business Insider's request for comment, which was made outside regular working hours.

—————————————————————————————————————————————
By: bnolan@insider.com (Beatrice Nolan)
Title: Tesla Faces Uphill Battle to Secure Elon Musk’s $56 Billion Pay Deal Approval, Says Chair
Sourced From: www.businessinsider.com/tesla-elon-musk-pay-56-billion-approved-shareholders-robyn-denholm-2024-5
Published Date: Fri, 17 May 2024 10:58:11 +0000