Certain shareholders of EV giant Tesla Inc TSLA are writing to the Delaware Court of Chancery regarding its nullification of the company CEO’s 2018 compensation package worth $56 billion and Elon Musk is thankful for it.
What Happened: Alexandra Merz is one of the shareholders. In the content of her letter posted on X, she argues that she sees no financial merit for herself in the court’s judgment nullifying Musk’s pay package.
“The anticipated invalidation of the 2018 pay package due to the court ruling does not provide a solid foundation for calculating potential financial gains,” Merz wrote while adding that she has already submitted a written request to Tesla’s board requesting for reinstatement of a similar compensation package for the CEO.
She also criticized the request of the plaintiff’s counsel in the case for $6 billion compensation in Tesla stock, requesting the court to impose a lengthy vesting period if it chooses to grant it. This long vesting period would safeguard the interests of small shareholders such as herself, she added.
Another shareholder Kristen Netten took to X requesting more shareholders to join the campaign.
“Please consider respectfully & firmly stating your reasoning why the highly disproportionate representation of Shareholders in the ruling & that the Lawyers pay in 6B Tesla Shares a further insult,” Netten wrote.
Musk Responds: Musk took to X on Monday to thank the shareholders for the campaign.
“Thanks :),” he wrote.
Why It Matters: The writing campaign is being promoted on X under the hashtag #DelawareCourt81. It follows a significant ruling last month, where Delaware Court of Chancery judge Kathaleen McCormick nullified a 2018 pay package worth about $56 billion awarded to Musk by the Tesla board in 2018. The judge found the board to be insufficiently independent of Musk and the governance process leading to the grant as well as the value to be "unfair" to other shareholders. Musk is expected to appeal against the pay nullification decision.
The lawyers representing the plaintiff in the case approached the court last week requesting Tesla shares worth $6 billion for successfully challenging Musk’s pay. They further requested that they be allowed to sell these shares immediately without a holding period. The request is pending approval by McCormick.
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