Financial Services Association, April 17 (Editor Shi Zhengcheng) On Wednesday evening, Beijing time, tram giant Tesla, which recently received a lot of attention due to layoffs, released documents for its annual shareholders' meeting. In addition to routine matters such as electing directors, Tesla's shareholders also had a special vote this year — re-authorizing voting for the huge option incentives granted to CEO Musk in 2018.

According to the schedule, the 2024 Tesla Shareholders' Meeting will be held on June 13.

Just vote again

As the craziest executive compensation plan in US business history (I'm afraid there isn't one), Tesla's shareholders' meeting approved a special “performance option reward program” in 2018: starting in 2018, the company will not pay any salary or cash rewards to Musk, and will only grant options based on the listed company's market value and revenue/EBITDA.

From the perspective of 2024, Musk has completed this challenge: the company's market capitalization rose from $59 billion at the beginning of 2018 to over trillion US dollars at one point, and the associated performance indicators have also been achieved. According to that year's incentive plan, Musk was able to buy up to 304 million Tesla shares at a price of 23.34 US dollars, but he had to hold the shares for 5 years before selling them.

Faced with this plan, which seemed “no different from bragging,” 73% of Tesla shareholders other than Musk voted for it in 2018. According to media estimates, based on stock price fluctuations, this option incentive program brought Musk a total of about 50 billion US dollars in compensation.

However, in January of this year, the US state of Delaware issued a ruling stating that the process of approving Musk's incentive plan was seriously flawed. The board members were “servants who bowed too much to their owners” and that there was insufficient information provided to shareholders before voting, and ordered the abolition of this “largest potential compensation plan in a listed company in history,” requiring the parties involved in the case to agree on how Musk should return the excess compensation.

Tesla is still appealing the decision, but going through the shareholders' meeting approval process is also a more direct method: since the judge believes Tesla has not disclosed complete information, now everyone knows everything about the post-2018 period, so let's just vote again.

Tesla Chairman Denome said in his annual shareholder letter that due to the Delaware court's attempts to speculate on shareholders' decisions, Musk has not been paid for any work done for Tesla in the past 6 years, and these jobs have helped Tesla achieve huge growth and shareholder value. The company did not approve the Delaware court's ruling, nor did it believe that what the court said was a reasonable way to operate the company law, so now it is requesting shareholders to once again approve Musk's 2018 remuneration plan.

Tesla also emphasized in the document that it will take time and “billions of dollars in additional expenses” to renegotiate Musk's salary plan, so it is faster to approve the old 2018 plan, and it will also prevent “Tesla's most important employees” from being in the midst of uncertainty for a long time.

There are also matters such as layoffs and relocation of registered sites

Incidentally, Denom also mentioned the “10% global layoff” in the shareholder letter. She explained that due to rapid growth over the years, the company duplicated roles and job functions in some areas, so every aspect of the business needed to be examined to reduce costs and increase productivity to prepare for the next phase of growth.

Also, after the Delaware court ruling, an angry Musk also called on social media for “companies registered in Delaware to be removed as soon as possible.” Therefore, at this year's shareholders' meeting, Tesla also proposed moving the company's registered office to Texas.

In February of this year, SpaceX, under Musk, moved its registered place of registration to Texas, and the brain-computer interface company Neuralink has also moved to Delaware.

In regular board election topics, Tesla suggests that shareholders vote for Musk's brother Kimbal Musk and James Murdoch to be re-elected as directors of the company. Kimbal has been a Tesla director since 2004, and James Murdoch joined the board of directors in 2017.

Editor/jayden