SAN FRANCISCO — Tesla shareholders overwhelmingly reapproved Elon Musk’s controversial 2018 pay package, bringing resolution to a divisive issue that has been hanging over the future of the company. The $56 billion package, which was invalidated by a Delaware judge earlier this year, allowed Musk to earn massive amounts in stock options as Tesla reached certain valuation milestones. This deal played a significant role in making Musk the wealthiest person in the world.
The recent vote by shareholders does not immediately reinstate Musk’s pay, but it signals strong support for the package among Tesla’s investors. Leading up to the vote, there was a split among investors on whether to support Musk’s compensation. Some major shareholders criticized him as a distracted leader undeserving of such rewards, while others praised him as a generational genius.
Renowned investor, Ron Baron, emphasized the importance of Musk to Tesla, calling him indispensable and advocating for proper recognition of his contributions through compensation. The preliminary results of the vote were met with applause from investors and supporters, including CEO Linda Yaccarino, who lauded Musk’s leadership and vision for Tesla’s future success.
The reaction from investors and supporters following the vote was positive, with Musk even pledging to make Tesla the most valuable company on Earth. However, both Musk and a Tesla spokesperson did not respond to requests for comment following the vote, leaving speculation about the next steps in the process.
The significance of shareholder votes in corporate decision-making was highlighted by James Park, a professor specializing in securities regulation and corporate law at UCLA School of Law. The vote demonstrated corporate democracy in action, showcasing the influence stakeholders have on crucial matters within a company.
In a January post on social media, Musk hinted at distancing himself from Tesla following the invalidated pay package, posing a potential challenge for the electric-vehicle maker already struggling with weak sales, global competition, and layoffs. The support from key investors leading up to the shareholder meeting in Austin was mixed, creating suspense around the ultimate outcome until Musk’s announcement on social media late Wednesday.
The full results of the shareholder vote are set to be disclosed during the Tesla shareholder meeting in Austin. Musk’s announcement on social media hinted at a favorable outcome for restoring his pay, surpassing the necessary threshold for victory. Musk’s criticism of Delaware’s Court of Chancery in January, along with his decision to hold a shareholder vote on incorporating in Texas, further underscores the entrepreneur’s impactful presence in the company’s direction.