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Shareholder suit attacks Elon Musk's pay, seeks to overhaul Tesla board

The lawsuit alleged that Musk used his power over Tesla's board to buy SolarCity at a price that unfairly benefited Musk, a large shareholder in SolarCity

Tom Hals | Reuters  |  Wilmington, De 

Elon Musk
Elon Musk

Elon Musk’s multi-billion dollar compensation package should be rescinded and the of Inc should be overhauled to better protect investors in the electronic car company, according to a law suit filed by a shareholder on Thursday.

The lawsuit accused the of corporate waste and Musk, the company’s chief executive officer and chairman, of unjust enrichment.

The lawsuit is seeking class action status.

said in a statement that the lawsuit “seeks to take the power from our and instead give it to plaintiffs lawyers. We will respond accordingly.”

Musk received the support of the company’s in March for a package that estimated to be worth $2.6 billion.

A Morgan Stanley analyst estimated the package could be worth up to $70 billion if the company continues to grow quickly. While the award of the package cooled speculation that Musk might be planning to quit, it was also criticized for its unprecedented size.

Proxy advisory services ISS and Glass Lewis both had recommended reject the package.

“The new E. Musk compensation plan is so large it dwarfs the package of every other public company CEO,” said the complaint by Richard Tornetta that was unsealed on Thursday in Delaware’s Court of Chancery.

Tesla’s statement noted that Musk gets nothing unless the company’s market value doubles and continues to increase until it becomes one of the world’s most valuable

Much of the complaint describing the how the package is unfair was redacted.

The complaint said Tornetta obtained corporate records from Tesla as permitted under Delaware corporate law. sometimes provide that information only if a shareholder signs a non-disclosure agreement.

The lawsuit was unsealed days after shareholders rejected a shareholder proposal to strip Musk of the chairman role.

That had represented the strongest challenge yet to Musk’s grip on the Silicon Valley car maker, which also faces production setbacks and expectations by many analysts that it will need to raise new cash.

The case was assigned to vice chancellor Joseph Slights. In March, Slights ruled against Tesla’s request for an early dismissal of a shareholder class action challenging the company’s acquisition of Corp, a renewable energy company. The lawsuit alleged that Musk used his power over Tesla’s to buy at a price that unfairly benefited Musk, a large shareholder in

The SolarCity deal closed in November 2016. That case is proceeding to trial.

First Published: Sat, June 09 2018. 22:08 IST