Tesla is seeking shareholder approval to reinstate a $56 billion Compensation package for CEO Elon Musk, a proposal that was previously rejected by a Delaware judge earlier this year, and to relocate the company’s corporate headquarters to Texas.

These proposed changes, slated to be voted on by stockholders at the annual meeting on June 13, may face greater resistance compared to their initial approval in 2018. The Austin-based electric vehicle manufacturer is grappling with declining global sales, sluggish demand for electric vehicles, an ageing product line-up, and a 37% decrease in its stock price since the beginning of the year.

In January, Chancellor Kathaleen St. Jude McCormick ruled that Musk is not entitled to the landmark stock compensation plan intended to be granted over a period of 10 years. Responding to a lawsuit from a shareholder, she nullified the compensation package, citing Musk’s significant influence over the board, which rendered the compensation process unfair to stakeholders. “Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf,” she stated in her ruling.

However, in a letter to shareholders disclosed in a regulatory filing on Wednesday, Chairperson Robyn Denholm argued that Musk has successfully delivered the growth envisioned for the automaker. Denholm highlighted that Tesla has achieved all the stock value and operational targets outlined in the 2018 compensation package approved by shareholders, resulting in a 571% increase in share value since the initiation of the pay package.

Denholm expressed discontent with the Delaware Court’s intervention, stating, “Because the Delaware Court second-guessed your decision, Elon has not been compensated for his contributions to Tesla over the past six years, which have significantly contributed to growth and shareholder value.” Denholm described this outcome as fundamentally unjust, echoing sentiments expressed by numerous shareholders who have voiced their concerns.

In the regulatory filing, Tesla announced its intention to appeal the court’s decision. If shareholders endorse the proposed new compensation package, the company aims to address the disclosure and procedural deficiencies highlighted by McCormick, as well as rectify any breaches of the board’s fiduciary duty.

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