Tesla shareholders file lawsuit against Musk, accusing him of diverting company resources to xAI

On June 13, some Tesla shareholders launched a lawsuit against the company’s CEO Elon Musk and other executives because they believed that Musk had sacrificed Tesla’s interests to facilitate his creation in 2023. artificial intelligence company xAI.

Shareholders pointed out that Musk not only poached key employees from Tesla, but also transferred GPU resources worth at least US$500 million to xAI, and used Tesla's data for xAI development work, but did not give Tesla Pull corresponding compensation.

Complaints from major investment shareholders

In the lawsuit, shareholders cited a previous tweet from Musk in which he mentioned that he would consider moving the artificial intelligence business away from Tesla if he failed to obtain 25% voting control of Tesla. .

Shareholders viewed this as an open threat that Musk could deprive Tesla of business opportunities unless his conditions were met.

Additionally, Musk has repeatedly publicly positioned Tesla as an AI-focused company, which partly explains why he has shifted resources and attention toward xAI, to Tesla's detriment .

According to documents, Musk’s series of actions created hundreds of billions of dollars in value for xAI, while at the same time Tesla suffered considerable losses.

Major shareholders request multiple damages

In the lawsuit, shareholders formally accuse Musk of breaching his fiduciary duties as a Tesla executive and believe other board members have done the same. Shareholders also stressed that board members were unable to be impartial when dealing with issues involving Musk.

The plaintiff further stated that Musk obtained improper benefits from the flow of personnel and resources between companies. They believe it is unreasonable to allow Musk to retain these interests.

Therefore, the shareholders asked the court to intervene, award Tesla damages due to the transfer of personnel and resources, and force Musk to give up his shares in Tesla, while implementing a constructive trust for his interests in xAI, and Take other necessary remedial measures.

Shareholders meeting approves Musk’s US$56 billion remuneration package

Although shareholders filed lawsuits against Musk's resource transfer behavior, at another annual shareholder meeting, Tesla shareholders passed a $56 billion compensation package for Elon Musk with a large margin. This decision is in sharp contrast to the lawsuit and demonstrates the trust and support shareholders have in Musk and their recognition of his contributions as a leader of the company.

The shareholders' meeting also decided to move Tesla's legal seat from Delaware to Texas. This not only increased Tesla's leverage in the controversial case in the Delaware court, but also marked the beginning of Musk's relationship with the state. Tesla's board of directors scored a notable victory in its battle with major investors. Despite opposition from major investors such as Glass Lewis and ISS, broad support from large institutional and retail investors ensured the pay package was passed.

Shareholders maintain confidence in Musk's leadership. They believe that Musk is an important driving force for Tesla's success and look forward to Tesla's continued innovation and development under his leadership. Although Tesla's sales and profits have slowed recently, shareholders voted in favor of Musk's compensation package, showing their confidence in the company's future development.

However, this compensation package has also caused some controversy. Some investors believe the compensation is too generous for a leader who oversees multiple companies and faces strategic turmoil at Tesla. Tesla's board of directors stated that the compensation package is an affirmation of Musk's contribution to Tesla over the past few years and is also to ensure that he can continue to contribute to Tesla's future development.

Conclusion:

The Tesla shareholder vote and the lawsuit against Musk reveal the complex relationship between corporate governance, shareholder rights and executive liability. The shareholders' decision shows that, despite their differences, they generally recognize Musk's contribution to Tesla's long-term development and are willing to support his continued leadership of the company.

However, litigation cases also remind us that resource allocation and executive behavior within a company need to be transparent and fair to safeguard the interests of all shareholders and fair competition in the market.

As Tesla continues to pursue innovation in the fields of electric vehicles and sustainable energy, shareholders and the market will pay close attention to how the company responds to these challenges to ensure that the interests of all parties are balanced and sustainable development is achieved.

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