SAN FRANCISCO, California – Shareholders of Tesla voted to reinstate Elon Musk’s controversial pay package, despite skepticism from some investors and analysts.
While the majority supported the reinstatement, concerns lingered among investors like Ibrahim AlHusseini, who characterized the decision as a “game of chicken.” AlHusseini, an early Tesla investor, reluctantly endorsed the $56 billion package, acknowledging Musk’s ability to meet seemingly impossible milestones.
Although Tesla’s stock has struggled in the market, dropping nearly 30% year-to-date, Musk’s pay package received 77% support from investors. The package, originally valued at $56 billion, now stands at about $46 billion due to Tesla’s decreased market capitalization.
The vote to reinstate the package does not guarantee Musk will receive the historical pay. Legal challenges remain, with uncertainty surrounding the final decision that could involve the Supreme Court and Delaware Chancery Court.
New York City Comptroller Brad Lander, a vocal opponent of the package, criticized the decision as a “mistake.” Vanguard, Tesla’s largest outside institutional shareholder, played a crucial role in the package’s approval, despite initial reservations in 2018.
Longtime Tesla investor Ross Gerber expressed disappointment in Vanguard’s change of heart, questioning the rationale behind voting for the “outrageous” pay package. Gerber, who initially supported the package in 2018, switched his stance this time, highlighting Musk’s “horrendous” performance.
Analysts have varied opinions on the reinstatement, with some seeing it as a positive development for investors. Canaccord Genuity’s George Gianarikas and Wedbush’s Dan Ives viewed the approval as a win for Musk and shareholders, emphasizing the critical role Musk plays in Tesla’s success.
On the other hand, Dave Harden of Summit Global cautioned against buying Tesla shares at this time, citing significant dilution risks and the company’s unproven track record in AI and robotics.
The future remains uncertain for Tesla as it navigates legal challenges and investor skepticism, with contrasting views on Musk’s leadership and the company’s potential growth trajectory. As Tesla faces ongoing scrutiny, the outcome of these developments will undoubtedly shape its path in the competitive automotive industry.