though$Tesla (TSLA.US)$CEO Musk's salary package was previously declared invalid by the US Delaware court, but Tesla submitted proxy documents on Wednesday stating that it will once again ask shareholders to vote for Musk's $56 billion compensation package. Meanwhile, Tesla also said it would call a vote to move the company's registration from Delaware to Texas.

According to media reports, Tesla Chairman Robyn Denholm criticized the January ruling of the Delaware State Court in proxy documents, saying that this is equivalent to shareholders having to re-evaluate Musk's performance rewards. “Because the Delaware court re-evaluated the investor's decision, Musk has not received any compensation for his work for Tesla for the past six years. During this period, he helped the company achieve significant growth and a significant increase in shareholder value.”

Shareholders suing Tesla criticized the CEO for being overpaid and opaque. In an earlier ruling, the judge described Tesla directors as “submissive servants of a bossy owner” and said that senior management did not take into account the best interests of investors.

Musk, who also runs six companies, said earlier this year that unless he owns 25% of Tesla's shares, he would rather build AI and robotics products elsewhere. According to the data, Musk currently owns about 13% of Tesla's shares.

Tesla's stock price fell more than 2% at the opening of the US stock market on Wednesday, and finally closed down 1.06%. The stock has already fallen 37% this year as the expected slowdown has turned into an unexpected drop in vehicle deliveries. Earlier this week, Tesla announced plans to lay off more than 10% of its global workforce and the departure of two senior executives. Barclays previously lowered its share price target for Tesla to $180 (previously $225), keeping the flat rating unchanged.

Tesla: 2018 compensation plan has been supported by shareholders

Tesla's board of directors set up a special committee this year to determine whether to continue to register in Delaware and whether to change registration in another state while holding a shareholders' referendum to determine Musk's remuneration. The committee said in a document that negotiations on the new pay package will take time and lead to billions of dollars in additional compensation expenses, but if the 2018 compensation plan is directly approved, these troubles can be avoided.

The Special Committee's report states that the new referendum will allow investors “to decide for themselves whether they think Musk's pay is fair, taking into account his achievements and its impact on shareholders.”

According to documents released by Tesla, dozens of institutional shareholders have now contacted Tesla and expressed support for the 2018 compensation plan, including four of the top ten shareholders. Additionally, thousands of retail investors have also sent letters and emails to the board of directors to express their support.

Tesla cites one of its biggest shareholders T. Rowe Price Group Inc. sent a letter to Denholm, where the investment agency called the court ruling “an unpleasant surprise” and recommended another vote on the pay package. “Judging by Zhu Geliang in hindsight, we don't think there is any need to argue about whether the compensation plan is in the long-term interests of investors. Investors should not expect to re-accept cancelled options and assume that all value creation is provided to us free of charge.”

Full commitment to Texas

Tesla's plan to move to Texas can be said to be one of the consequences of the Delaware court ruling. Musk has previously changed the place of registration of several of his closely held companies, including SpaceX, which applied to move from Delaware to Texas in February this year.

Musk posted on his social media site X at the time, “If your business is still registered in Delaware, I recommend moving to another state as soon as possible.”

According to Tesla's documents, the company initially listed nine states as registration targets, then narrowed it down to four states, including California, Nevada, New York, and Texas. In the end, Tesla chose Texas. After all, this is where Tesla's headquarters are located, and it opened its newest electric vehicle factory in Texas two years ago.

Tesla stated in the document, “Tesla is fully invested in Texas, and Tesla's corporate identity is increasingly intertwined with Texas.”

Tesla's shareholders' meeting is expected to be held on June 13. In addition to compensation and relocation matters, Tesla will also require investors to re-elect two directors: Musk's brother Kimbal Musk and media mogul Murdoch's son James Murdoch.

In addition, Tesla also said it paid about $200,000 to Musk's social media site X last year as part of a multi-platform advertising campaign. The company also paid about $2.9 million last year and early this year to a company operated by Musk to provide security for Musk himself.

Editor/Somer