Tesla CEO Elon Musk is seeking to add tens of billions to his net worth by changing the law in Delaware. A proposed bill, drafted by a law firm representing both Musk and Tesla, aims to alter the state’s corporation law to allow Musk to receive his full $56 billion compensation package.
The law firm, Richards, Layton & Finger, claims that statutory changes are necessary to “restore the core principles” of Delaware’s corporate law. The proposed legislation would limit the kinds of documents that minority stakeholders can obtain through “books and records” inspection requests, effectively shielding Musk from scrutiny.
If signed into law by Governor Matt Meyer, the bill could pave the way for Musk to no longer be considered a controller of Tesla, allowing him to add billions to his net worth. The proposed legislation has already been introduced in the Delaware General Assembly.
However, critics argue that the changes would undermine corporate law’s primary goal: protecting minority investors. Boston College corporate law professor Brian JM Quinn stated that the bill would “protect them less.” The legislation will need to pass both chambers of the state legislature and be signed by the governor to take effect.
Musk’s controversial pay package dates back to 2018, when he struck a deal with Tesla’s board to receive stock options based on the company’s revenue and market cap. The package was initially met with skepticism but ultimately approved by shareholders. However, in January 2024, a Delaware judge ruled that the package was inappropriately set by Tesla’s board and ordered its rescission.
Despite this setback, Musk is now seeking to change the law to allow him to receive his full compensation. With Trump’s blessing and increased influence over state governments, Musk may have more opportunities to exert undue influence over policy-making bodies, raising concerns about the potential for further corruption and erosion of corporate governance.
Source: https://www.jalopnik.com/1794019/musks-new-plan-to-get-his-56-billion-change-the-law