Elon Musk's potential $1 trillion fortune boosted by Texas' recent legislation

Tesla Shareholders and Elon Musk's Controversial Pay Packages

Elon Musk, the CEO of Tesla, is once again at the centre of a debate over his pay packages, with the latest one being worth an estimated $1 trillion. This new pay package, developed by Musk's board, has raised concerns among some shareholders and regulatory bodies.

The 2018 pay package for Musk was significantly different from the new one, and it sparked a lawsuit from shareholder Richard Tornetta, who owned nine shares of Tesla. Under Delaware law, there is no limit on who can sue, and many lawsuits are brought by investors with tiny stakes. However, Tesla's reincorporation in Texas in 2021 has changed the landscape. Texas's corporate law now requires shareholders to own 3% of a stock before they can sue, a change that occurred in May 2022.

Tesla's reincorporation in Texas also gives the company better protection from legal challenges. The new 3% bylaw adopted by Tesla makes Musk and a few other major shareholders, such as Vanguard, BlackRock, and State Street, the only ones who can sue the company. This means that Tornetta, and other shareholders like him, are now excluded from filing a lawsuit against Musk's new pay package under Texas law.

The ratification vote on Musk's 2018 pay package was an attempt to undo a court ruling that struck down the $56 billion compensation package in 2020, which the Delaware judge considered "unfathomable" and unfair. However, the ratification vote did not matter because the Delaware judge's ruling is currently on appeal.

The New York State Comptroller is urging Tesla shareholders to repeal the 3% threshold at the annual meeting, arguing that it is a bait-and-switch attempt to deceive shareholders. The comptroller believes that this threshold is designed to limit shareholder lawsuits and protect Musk's new pay package.

If shareholders do not like the pay package proposal, they have the option to sell their shares. However, Tesla's new pay package for Musk will allow him to use his voting power, which is around 13.5%. This means that even if shareholders sell their shares, Musk's voting power could still influence the company's decisions.

Recently, Tesla has reported approximately 600 orders since its launch in India, according to Bloomberg News. Despite the controversy surrounding Musk's pay packages, Tesla continues to expand its operations globally.

In conclusion, the debate over Elon Musk's pay packages is far from over. Shareholders, regulatory bodies, and the public are closely watching the developments, and the outcome could have significant implications for Tesla and its shareholders.