Tesla Investor’s Suit Targets Vote on Texas Move, Musk Pay

A Tesla Inc. shareholder sued to challenge an upcoming proxy vote about whether the electric-car maker should move its corporate home to Texas and re-approve a $56 billion pay package for co-founder Elon Musk that was thrown out by a Delaware judge.

Donald Ball, who owns more than 28,000 Tesla shares, argues the company is violating its corporate charter by saying it needs only a bare majority of shareholders’ votes in the June 13 proxy fight to move its state of incorporation away from Delaware.

Ball also accuses the world’s third-richest person of trying to force investors into voting for the Texas move and his resurrected pay package with threats about shifting artificial intelligence assets away from Tesla.

“Musk has engaged in strong-arm, coercive tactics to obtain stockholder approval” of both proxy questions, Ball said in his 21-page complaint filed Thursday in Delaware Chancery Court. He sued Tesla directors along with Musk.

John Reed, a Wilmington, Delaware-based lawyer representing Tesla, had no immediate comment. An email to Tesla’s media relations department wasn’t immediately returned.

Record-Setting Pay

The suit is the latest twist in the fallout from Delaware Chancery Judge Kathaleen St. J. McCormick’s decision in January voiding the record-setting executive-compensation plan that Tesla’s board approved for Musk in 2018. McCormick ruled that the board had conflicts of interest and that Tesla failed to properly disclose the plan’s details.

McCormick will consider July 8 whether to approve a request for billions of dollars in legal fees from lawyers for the Tesla investor who challenged Musk’s pay.