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A compensation package for CEO Elon Musk that could be worth more than $55 billion ( 4.4 lakh crore) is being contested by Tesla shareholders. In 2018, a performance-based stock option grant was allegedly negotiated by a compensation committee and approved by Tesla board members, who had conflicts of interest because of their connections to Musk on a personal and professional level, according to the lawsuit. On November 14, testimony in a courtroom in Delaware started.

Elon Musk, who held approximately 22% of Tesla at the time the plan was approved, would receive stock worth 1% of the market value of the shares at the time of the grant for each of the 12 milestones. If the firm's market capitalisation increased by $600 billion, Musk's ownership stake would increase to about 28%.

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As per the compensation package, for each milestone, aggressive revenue and pretax profit growth targets must be met, as well as increasing Tesla's market capitalisation by $50 billion. Only if Tesla achieved a market capitalisation of $650 billion and unheard-of revenues and earnings within a decade would Musk be entitled to the full benefit of the pay plan, $55.8 billion.

According to the lawsuit, Tesla has so far met all 12 market capitalisation targets and 11 operational milestones, which has caused 11 of the grant's 12 tranches to vest and given Musk almost $52.4 billion in stock option gains. Tesla's market valuation has grown from $53 billion to more than $690 billion since the grant was given out, momentarily reaching $1 trillion earlier this year.

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According to the lawsuit, a false and incomplete proxy statement was used to support the shareholder vote to approve that compensation.

Like all manufacturers, Tesla's stock has taken a beating in 2022 as a result of a combination of clogged supply lines and rising prices. Tesla stock has decreased 46% so far in 2022. Ford and GM stock prices have decreased by almost 31%.

(With agency inputs)

ABOUT THE AUTHOR

Sounak Mukhopadhyay

Sounak Mukhopadhyay, who also goes by the name Sounak Mukherjee, has been producing digital news since 2012. He's worked for the International Business Times, The Inquisitr, and Moneycontrol in the past. He's also contributed to Free Press Journal and TheRichest with feature articles. He covers news for a wide range of subjects including business, finance, economy, politics and social media. Before working with digital news publications, he worked as a freelance content writer.
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