April 17 (UPI) — Tesla plans to ask shareholders on Wednesday to reinstate Elon Musk’s compensation package of $56 billion after a Delaware judge struck it down in January.
The electric vehicle maker announced the plan in a proxy filing Wednesday in which it said the court’s decision to strike down the pay package created a “fundamental problem for the company.”
Tesla noted to shareholders that the Delaware judge’s decision rescinded the pay package that an “overwhelming majority” of them voted to approve.
“Corporate democracy and stockholder rights are at the heart of Tesla’s values,” the company said.
Delaware Chancery Court Chancellor Kathleen McCormick called Musk’s compensation “unfair,” agreeing with shareholder Richard Tornetta that he had too much control over setting the rules and the price. She had told Musk he must pay back what he had already been given in the compensation package.
Tesla added that the vote would also shareholders will also be asked to vote on whether to move the company’s incorporation from Delaware to Texas.
The electric car giant hired proxy solicitor Innisfree M&A to lean on shareholders and secure enough votes for what is expected to be contentious votes. Tesla had hired Innisfree M&A in 2018 when talks started about Musk’s original compensation package.
Some investors suggested that Tesla may be getting ready to change its governance. The board had been condemned in the past for not putting tighter reins on Musk for fighting with regulators and advertisers.
The move by Tesla comes after Musk earlier this week announced that Tesla will lay off more than 10% of its global workforce.
Musk said the cost-cutting was needed to increase productivity and innovation.