WILMINGTON, Del. — Elon Musk’s multibillion-dollar compensation package should be rescinded and the board of Tesla should be overhauled to better protect investors in the electronic car company, according to a lawsuit filed by a shareholder on Thursday.
The suit accused the board of corporate waste and Musk, the company’s CEO and chairman, of unjust enrichment.
The lawsuit is seeking class action status.
Tesla said in a statement that the lawsuit “seeks to take the power from our shareholders and instead give it to plaintiffs lawyers. We will respond accordingly.”
Musk received the support of the company’s shareholders in March for a package that Tesla estimated to be worth $2.6 billion.
A Morgan Stanley analyst estimated the package could be worth up to $70 billion if the company continues to grow quickly.
While the award of the pay package cooled speculation that Musk might be planning to quit, it also was criticized for its unprecedented size.
Proxy advisory services ISS and Glass Lewis both had recommended shareholders reject the package.
“The new E. Musk compensation plan is so large it dwarfs the pay package of every other public company CEO,” said the complaint by Richard Tornetta that was unsealed on Thursday in Delaware’s Court of Chancery.
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Tesla’s statement noted that Musk gets nothing unless the company’s market value doubles and continues to increase until it becomes one of the world’s most valuable companies.
Much of the complaint describing the how the pay package is unfair was redacted.