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Reduction Of Musk’s Pay, Overhaul Of Tesla Board Sought In A Shareholder Lawsuit


06/11/2018


Reduction Of Musk’s Pay, Overhaul Of Tesla Board Sought In A Shareholder Lawsuit
A law suit filed against founder, CEO and chairman of Tesla Inc Elon Musk and the board of the company has claimed that in order to better protect the interests of the shareholders and the investors in the electric car making company, the multi-billion dollar compensation package for Musk should be withdrawn and the board of the company should be overhauled.
 
The law suit alleged that Musk indulged in unjust enrichment while the board of the company engaged in corporate wastage.
 
Class action status has been sought in the lawsuit.
 
The lawsuit “seeks to take the power from our shareholders and instead give it to plaintiffs lawyers. We will respond accordingly,” Tesla said in a statement.
 
An estimated pay package of about $2.6 billion for Musk was approved by the shareholders of the company in March this year.
 
According to the predictions of an analyst from Morgan Stanley, if Tesla continued to perform well at a quick pace, that pay package could grow to become about $70 billion. While the size of the compensation package for Musk was severely criticized by many for its huge size, it also doused speculations that Musk could leave the company.
 
A call to the shareholders to reject the pay package was issued by both proxy advisory services ISS and Glass Lewis.
 
“The new E. Musk compensation plan is so large it dwarfs the pay package of every other public company CEO,” said the complaint by Richard Tornetta that was unsealed last week in Delaware’s Court of Chancery.
 
The statement from Tesla clearly mentioned however that Musk would have to paid nothing unless the market value of the company gets doubled and the company continues on a path of increase till such time that it becomes one of the most valued company in the world. the statement also refuted most of the allegations in the law suit hat the pay package for musk was unfair. 
 
Corporate records from Tesla was obtained by Tometta according to Delaware corporate law, the complaint said. sometimes companies provide such documents to a shareholder only if he or she agrees to sign a non-disclosure agreement. 
 
This lawsuit comes within days that at attempt to take away the role of the chairman of the company by a shareholder proposal was rejected at a shareholders’ meeting.
 
That attempt had been the strongest challenge yet that has bene faced by Musk since the inception of the company. Tesla is under severe pressure with regards to setbacks in meeting its production target for its affordable Model 3 car which is critical for the future success of the company. Additionally, there are some analysts who speculate that the company would never be able to raise new cash.
 
(Source:www.reuters.com)


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