Tesla asks shareholders to re-ratify Elon Musk’s $56 billion payout

Billionaire entrepreneur and Tesla boss Elon Musk

Tesla Inc. will have shareholders vote again on its compensation package for Elon Musk after a Delaware court voided the $56 billion award arranged for the chief executive officer in 2018.

In its proxy filing issued Wednesday, Tesla also said it will call a vote on moving the company’s state of incorporation to Texas from Delaware. The electric-car maker will convene its annual meeting on June 13.

Tesla Chair Robyn Denholm criticized the Delaware Chancery Court’s January decision, writing in the proxy that it amounted to second-guessing shareholders who had approved Musk’s compensation. Chief Judge Kathaleen St. J. McCormick described the company’s directors as “supine servants of an overweening master” and said they hadn’t looked out for the best interests of investors.

“Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value,” Denholm wrote.

The shareholder who sued Tesla over the CEO’s compensation criticized it as excessive and opaque. Musk, who runs six companies, said early this year he preferred to work on artificial intelligence and robotics products elsewhere unless he owns a 25% stake in Tesla. He now owns about 13% of the company.

Tesla shares rose 1.1% as of 7 a.m. New York time, before the start of regular trading. The stock tumbled 37% this year through Tuesday’s close.