Tesla shareholders have approved CEO Elon Musk’s mammoth pay package, the electric vehicle maker said Thursday, expressing high appreciation for his leadership and encouragement to focus on his biggest source of wealth.
Shareholders also approved the proposal to move the company’s headquarters from Delaware to Texas, Tesla – he stated at the annual shareholders meeting in Austin, Texas. They also approved other proposals, including the re-election of two board members: Musk’s brother Kimbal Musk and James Murdoch, the son of media tycoon Rupert Murdoch.
Shareholders have indeed increased investor control by passing proposals to shorten board terms to one year and lowering voting requirements for proposals to a straightforward majority.
“Not only are we opening a novel chapter for TeslaWe’re starting to write a novel book,” Musk said on stage during the meeting.
Delayed on Wednesday evening, Musk indicated that the proposals enjoyed overwhelming support and thanked shareholders. A chart on his social media platform X showed that the resolutions were passed by a wide margin.
Tesla last valued Musk’s compensation package at $44.9 billion in an April regulatory filing. It was once worth $56 billion, but its value has fallen along with Tesla’s stock. Teslathe company’s stock price is down about 60% from its 2021 peak as electric vehicle sales decline, and Musk’s attention has ranged from Tesla and other companies he runs. The company’s shares rose 2.9% on Thursday.
The approval also underscores the support Musk enjoys Teslaa base of retail investors, many of whom are die-hard fans of the mercurial billionaire. The proposal was approved despite opposition from some enormous institutional investors and proxy firms.
The Tesla The CEO could still face a lengthy legal battle to convince a Delaware judge who in January invalidated the package, calling it “unfathomable.” He could also face novel lawsuits over the matter, which would be the largest in American corporate history.
Shareholder approval of the compensation serves both as support for Musk’s tenure and confirmation that investors are not willing to risk the company’s future.
In January, Musk threatened to build artificial intelligence and robotics products outside the US Tesla if he failed to gain sufficient voting control, which would essentially require approval of the 2018 pay package.
He shifted the company’s focus to robotics, shelving cheaper mass-market electric cars, raising concerns among some investors who feared autonomous technology would be arduous to perfect.
“This vindicates Musk and dispels some investor concerns about his withering interest Tesla,” said Sandeep Rao, senior researcher at Leverage Shares, which owns it Teslawrestling.
“Tesla Saved”
Musk’s army of diminutive investors won the fight to approve his pay package. Geek investors, who own an unusually enormous stake in the electric vehicle maker, tend to be detached about voting. But in a sporadic show of support, many people have been campaigning on social media for weeks to restore the billionaire celebrity CEO’s pay.
Institutional investors seemed divided on the issue. While some supported Musk’s pay, others, such as the California Public Employees Retirement System and proxy firms Glass Lewis and Institutional Shareholder Services, urged shareholders to reject the pay package, calling it excessive.
“When both institutions and proxy advisory firms lean in one direction, it is very sporadic for the vote to go the other way,” John Lawrence, a partner at the law firm Baker Botts, told Reuters. “In this case, it shows the company’s understanding of the power of social media.”
Support from retail investors and support from some enormous institutions were key to voting in Musk’s favor, a source familiar with the preliminary results told Reuters.
“We’ve got your back”
Musk enjoys a global fan base for turning Tesla from a startup into a multibillion-dollar behemoth and for innovations at his other companies, including rocket maker SpaceX. But standing up to influential investors who voted “no” on the compensation package took more than just a fan base.
“Don’t mess with Tesla retail shareholders,” Merz wrote Thursday, thanking people who voted. “Your votes will support address real injustice.”
Musk himself also actively sought their support, regularly posting on social media. He set up a separate website to inform investors about the proposals, which also included re-registering the company in Texas, and how to vote.
The company’s board regularly sent letters to shareholders, emphasizing Musk’s importance at Tesla and alluding to the risk of losing his interest if the compensation package was rejected. Musk even offered some voting investors tours of the Tesla factory.
The plan worked. Musk wrote in a weekend post on X that about 90% of retail investors who voted were in favor.
The approval is crucial as Musk faces an uphill legal battle to convince a Delaware judge who found that Tesla’s board is “obligated” to him, with Tesla also potentially filing novel lawsuits over the latest vote. Despite this, diminutive investors assured of continued support.
