Tesla's shareholders are voting to approve a $56 billion pay package for Elon Musk and to move the electric vehicle maker's legal home to Texas, Musk said on social media platform X on Wednesday, adding that passage was by wide margins.
Tesla’s shareholders had to approve Elon Musk’s $56 billion package, seen as a thumbs-up for his management and an appeal to focus on the electric vehicle maker.
Late Wednesday, Musk posted a chart on his social media platform X that showed the decision — and another vote to move the company’s legal home to Texas — passed by a wide margin, though shareholders can change their votes. until the beginning of the annual meeting.
Tesla shareholders OK Elon Musk’s huge pay package.
A person familiar with the audio of early voting confirmed that Musk released the exact number of numbers. The result will be announced at a meeting at Tesla’s headquarters in Texas at 4:30 p.m. EDT (2030 GMT) on Thursday.
Tesla’s CEO may still face a long legal battle to convince a Delaware judge, who in January struck down the package, calling it “incomprehensible.” He also faces new lawsuits over Thursday’s package, which dates back to 2018 and would be the largest in US corporate history.
Shareholder approval would be both an endorsement of Musk’s tenure and an assurance that investors don’t want to jeopardize the company’s future. In January, Musk threatened to build artificial intelligence and robotics products outside of Tesla if he didn’t get enough voting power, which essentially requires approval of a 2018 package.
He shifted the company’s focus to robot taxis, off the shelves of cheaper mass-market electric cars, a concern of some investors who worry that autonomous technology will be difficult to develop. Tesla’s stock price is down about 60% from its 2021 peak as sales of electric cars have slowed and Musk’s focus has shifted between Tesla and the other companies he runs.
Tesla shares were up 3.8% Thursday afternoon. “This vindicates Musk and eases investor concerns about his declining interest in Tesla,” said Sandeep Rao, senior analyst at Leverage Shares, which owns Tesla shares. Board President Robyn Denholm said in a regulatory filing earlier this month that restoring the salary package is necessary “to keep Elon focused and motivated.
“The board said Musk deserved the package because he hit all the ambitious targets for market capitalization, revenue, and profit. Leading proxy firms Glass Lewis and Institutional Shareholder Services urged shareholders to reject the package, and big investors such as Norway’s sovereign wealth fund and major US pension funds said they would vote against it.
The pay package is excessive and could allow Musk to increase his stock “at the expense of diminishing the value of other shareholders,” said Marcie Frost, CEO of the California Public Retirement System. Tesla has rallied support for Musk’s pay package, particularly from private equity investors, who make up an unusually large percentage of its ownership base but don’t often vote.
A source familiar with the figures said the vote from large institutional investors and small investors accounted for the support. Company executives have posted messages on the X platform saying Musk is critical to Tesla’s success.
Tesla ran ads on social media and Musk gave some voting shareholders a personal tour of Tesla’s factory in Texas.
Tesla shareholders also voted on other proposals, including the re-election of two board members: Musk’s brother, Kimbal Musk, and James Murdoch, son of media magnate Rupert Murdoch.
Delaware judge who opposed the package criticized Tesla’s board of directors for its “significance” to him, saying the plan was proposed by a troubled board with close personal and financial ties to its top management.
The board held a shareholder vote to support an appeal of its decision, in which the judge cited the board’s failure to fully inform shareholders before approving the 2018 pay package.
