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Tesla Urges Shareholders to Reinstate Elon Musk’s $56bn Pay Agreement

Tesla has requested shareholders to reapprove an unprecedented $56 billion compensation package for CEO Elon Musk following its rejection by a US judge. The board of directors, led by Tesla Chair Robyn Denholm, expressed its backing for the original pay deal, emphasizing the alignment of significant risks with potentially substantial rewards.

Quick Facts

• Tesla seeks approval to reinstate CEO Elon Musk’s $56bn pay package after it was rejected by a US judge.
• Shareholders are also being asked to approve a proposal to relocate the company’s corporate headquarters to Texas.
• Tesla faced a challenging period with an 8.5% drop in vehicle deliveries in the first quarter and a 37% decline in its shares this year.

Tesla’s request for reinstating Elon Musk’s $56 billion pay package comes after a US judge’s rejection of the initial deal. The board of directors, chaired by Robyn Denholm, stands in support of the original pay agreement, underscoring the association of substantial risks with the potential for considerable rewards.

Furthermore, shareholders are also being called upon to approve a proposal to relocate Tesla’s corporate home to Texas. This development follows a difficult period for the electric carmaker, during which its vehicle deliveries slumped by 8.5% in the first quarter, and its shares plummeted by 37% this year, despite the S&P 500’s 6% rise. Additionally, CEO Elon Musk recently announced a workforce reduction of over 10% to align the company for the next phase of growth.

Judge Kathaleen McCormick of Delaware’s Court of Chancery rejected Musk’s compensation package in January, citing the disproportionate influence of the South Africa-born entrepreneur on the deal. This move was made on the grounds that bestowing such an “unfathomable sum” upon Musk would be unjust to shareholders. Following the news of the proposed pay package, Tesla saw a 1% drop in its shares on Wednesday.

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