Austin, Texas – Tesla shareholders overwhelmingly supported Elon Musk’s record-breaking pay deal and approved the company’s move to re-incorporate in Texas, signaling their confidence in the CEO amidst ongoing legal challenges. Musk expressed his gratitude to shareholders after the results were announced at the annual shareholder meeting in Austin.
The shareholders showed strong support for a $56 billion compensation package awarded to Musk in 2018, with 77% of the votes in favor. This package had been voided earlier in the year by a Delaware judge and is now valued at approximately $48 billion, having received 73% support when originally granted six years ago. Additionally, an overwhelming 84% of shareholders voted in favor of Tesla re-incorporating in Texas, a decision influenced by the recent ruling against Musk’s pay package.
The Delaware judge’s decision highlighted concerns that Tesla’s board had not acted in the best interests of shareholders in approving the $56 billion deal. Following the shareholder meeting, Tesla’s stock showed little change in premarket trading but had risen by 3% during market hours on Thursday after Musk hinted at the positive outcomes of the proposals.
While shareholders’ approval is a significant win for Musk, legal challenges may still lie ahead for Tesla. Some shareholders are considering challenging the legality of the recent vote, potentially leading the company back to Delaware courts to defend against lawsuits. Business law experts suggest that the process leading to the vote may face scrutiny due to similar deficiencies that led to the invalidation of the 2018 vote.
The ongoing drama surrounding the vote intensified as Tesla Chair Robyn Denholm and Musk advocated for a new pay package similar to the one invalidated by the judge earlier in the year. Denholm’s open letter emphasizing the need to retain Musk’s attention to drive growth raised questions about the board’s decision-making process.
Despite opposition from some shareholders, such as Norway’s $1.7 trillion sovereign wealth fund and the California State Teachers’ Retirement System, other major investors like Baillie Gifford supported Musk’s package, citing alignment with shareholder returns. The debate over Musk’s pay package underscores the importance of his leadership to the future of Tesla, as some investors believe his relentless drive is indispensable to the company’s success.
Small shareholder groups and supporters of Musk took to social media to rally votes and express their support for the CEO. The outcome of the vote reflects shareholders’ belief in Musk’s vision and leadership, setting the stage for potential legal battles in the future as Tesla navigates challenges in corporate governance and compensation practices.
In conclusion, the shareholders’ resounding approval of Musk’s pay package and the company’s relocation to Texas underscore the ongoing support for the CEO amidst legal hurdles. The outcome of the vote highlights the significance of Musk’s leadership to Tesla’s future and the potential for continued legal scrutiny as the company addresses governance issues.