WILMINGTON, Del. — Tesla, its board of directors, and CEO Elon Musk were hit with a proposed class action lawsuit in Delaware Chancery Court on Thursday. The suit challenges Tesla’s plan to seek stockholder approval for the same $55.8 billion Musk compensation plan previously voided in January, alongside the company’s reincorporation as a Texas entity.
In an April filing with the U.S. Securities and Exchange Commission (SEC), Tesla’s board asked shareholders to approve the reincorporation from Delaware to Texas and to “ratify” Musk’s compensation package, which was struck down by the Chancery Court in January. The annual meeting to vote on these matters is set for June 13, 2024.
Shareholder Donald Bell filed the complaint, claiming that the redomestication vote breaches Tesla’s “Amended and Restated Certificate of Incorporation” from August 4, 2022, which requires a higher voting standard of just over 66%, rather than a simple majority. According to Bell, the company’s SEC proxy statement indicates that the redomestication would repeal the current charter, necessitating approval by at least 66⅔% of the voting power of all outstanding shares.
