A Tesla shareholder, Richard Tornetta, has gone against the company’s CEO and chairman, Elon Musk, demanding that he be stripped of his newly approved compensation package, valued at between $2.6 billion to $70 billion, depending on whether Tesla’s quick growth continues, according to Morgan Stanley predictions. He accuses the multibillionaire of unfair enrichment and has proclaimed that his goal is to protect investors.
“The new E. Musk compensation plan is so large it dwarfs the pay package of every other public company CEO,” the complaint to Delaware’s Court of Chancery reads.
The lawsuit also claims that the board, which approved the reward this March despite recommendation from consulting firms, should be overhauled.
Tesla’s management claims that the complaint “seeks to take the power from our shareholders and instead give it to plaintiffs lawyers. We will respond accordingly.”
The company also pointed out that Musk gets the unprecedented compensation package only if Tesla’s market value doubles and keeps rising.
With this lawsuit, the Silicon Valley tycoon faces a new challenge just days after dodging another threat after a shareholder proposed relieving Musk of his chairman position and re-electing three board members. This move was rejected by shareholders.
In 2003 Elon Musk set up Tesla in Palo Alto, California, and in 2004 became its chairman, steering the electric car maker to a market value close to those of General Motors, Ford and Fiat-Chrysler. However, recent concerns over the company’s state have increased despite Musk’s claims that Tesla will be profitable in the third quarter of 2018. In March, the National Transportation Safety Board set up a probe after a deadly crash of a Tesla car, during which its autopilot system was reportedly engaged.
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That month Moody's also cut Tesla's credit rating from B2 to B3 amid fears that the company may be unable to fulfill its production goals. The following month, Tesla missed its Model 3 target.