Tesla and its CEO, Elon Musk, have capitalized on a little-known provision in corporate law to pursue the restoration of Musk’s $56 billion pay package.
This untested maneuver has the potential to embroil the company in legal disputes once again.
The electric vehicle manufacturer proposed subjecting Musk’s 2018 remuneration agreement to a shareholder vote despite its invalidation by a Delaware judge in January. Tesla has leveraged a lesser-known section of Delaware’s corporate law that empowers companies to correct procedural flaws that would otherwise render their boardroom decisions null and void.
Tesla acknowledged that the special board committee responsible for its approval could not anticipate how Delaware law would interpret this unconventional course of action.
The provision was primarily intended to serve as a “Band-Aid” for minor errors in boardroom proceedings rather than to overturn significant court rulings.
Tesla’s proposal cites the discontent expressed by numerous shareholders regarding the...
This untested maneuver has the potential to embroil the company in legal disputes once again.
The electric vehicle manufacturer proposed subjecting Musk’s 2018 remuneration agreement to a shareholder vote despite its invalidation by a Delaware judge in January. Tesla has leveraged a lesser-known section of Delaware’s corporate law that empowers companies to correct procedural flaws that would otherwise render their boardroom decisions null and void.
Tesla acknowledged that the special board committee responsible for its approval could not anticipate how Delaware law would interpret this unconventional course of action.
The provision was primarily intended to serve as a “Band-Aid” for minor errors in boardroom proceedings rather than to overturn significant court rulings.
Tesla’s proposal cites the discontent expressed by numerous shareholders regarding the...
- 4/19/2024
- by Baila Eve Zisman
- Uinterview
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