Tesla investors back record-breaking Musk pay deal
Tesla shareholders have endorsed a record-breaking compensation package for CEO Elon Musk and approved relocating the firm’s legal headquarters to Texas.
This decision marks a victory for the multi-billionaire, who campaigned vigorously for the payout, potentially worth up to $56 billion (£43.9 billion), contingent on Tesla’s stock performance.
“Hot damn, I love you guys,” Musk exclaimed to an enthusiastic crowd of shareholders gathered in Texas for the firm’s annual meeting.
The substantial payout had sparked criticism, raising concerns about the company’s board being overly compliant and close to Musk.
However, the vote is not binding, and legal experts indicate it remains uncertain if a court that previously blocked the deal will accept the re-vote and permit the company to reinstate the pay package.
“The vote changes nothing,” stated Mathieu Shapiro, a managing partner at the law firm Obermayer Rebmann Maxwell & Hippel. “It only provides Tesla with opportunities to use the vote to seek a more favorable decision moving forward,” he added.
Musk announced his intention to move the firm’s legal headquarters after a Delaware judge, where the company is currently incorporated, nullified his pay package following a lawsuit from a small investor.
The fight over the plan had aired concerns about Mr Musk’s leadership, at a time when Tesla’s share price has fallen from its height and its position in the electric car industry is under pressure.
But Mr Musk rallied his fan base in support of the deal, appealing particularly to individual investors, who make up an unusually large portion of the firm’s shareholder base.
“It’s a pretty ringing endorsement,” said car industry analyst Karl Brauer.
Mr Musk got more than enough shareholder support “to justify the package,” he added.
The company did not immediately disclose the margin of the vote.
Mr Musk had previewed the results in a post on his social media company, X, formerly known as Twitter.
Shares in the company closed up nearly 3% after Mr Musk’s announcement.
The compensation plan gives Mr Musk rights to roughly 300 million shares – a roughly 10% stake in the firm – as a reward for the firm meeting goals once considered unfeasible, like becoming a $650bn firm.
“My understanding is that there’s been about 1,100% appreciation in Tesla stock. And that’s pretty, pretty impressive. Most CEOs have never done anything like that,” said Mr Brauer.
In the ruling earlier this year, Judge Kathaleen McCormick ruled the sum was “unfair” and the process for determining the package, by a board dominated by Mr Musk, was “deeply flawed”.
Tesla called the decision “fundamentally unfair, and inconsistent with the will of the stockholders”.
The company then submitted the deal to another vote – and asked its shareholders to back a plan to reincorporate the company outside the state of Delaware.
“It will be interesting to see if another court is willing to credit a vote taken after the trial court’s decision,” noted Mr Shapiro.
The board said Mr Musk deserved the package because Tesla achieved its ambitious targets under his leadership and that it was necessary to ensure he remains dedicated to the company.
Tesla executives also expressed support for the package in social media posts, saying that Mr Musk is crucial to the company’s success.
Meanwhile, Mr Musk promised a personal tour of Tesla’s factory in Texas to some shareholders who cast votes.
The package – worth an estimated 300 times what the top-earning boss in the US made last year – won backing from 73% of shareholders who voted six years ago.
Shareholders also approved the re-election of two board members at the meeting on Thursday: James Murdoch, the son of media tycoon Rupert Murdoch, and Mr Musk’s brother Kimbal Musk.
