Tesla shareholders approved a $56 billion compensation package for CEO Elon Musk and a Texas headquarters. Musk posted voting results on X late Wednesday, thanking supporters and presenting data showing the proposals would pass. Shareholders can amend their votes before the annual meeting.
The highest U.S. corporate pay contract in history might soothe investor fears about Musk's future at Tesla and help the business appeal a court ruling that nullified the package. According to a source familiar with the preliminary voting result, major institutional and retail investors supported it.
Tesla's Texas headquarters will disclose the final findings at 4:30 p.m. ET (2030 GMT) on Thursday. Musk may face fresh litigation over the recent vote, despite shareholder support, according to Reuters. A Delaware judge already determined that the Tesla board was "beholden" to him.
Both Tesla shareholder resolutions are currently passing by wide margins!
— Elon Musk (@elonmusk) June 13, 2024
♥️♥️ Thanks for your support!! ♥️♥️ pic.twitter.com/udf56VGQdo
According to UC Berkeley law scholar Adam Badawi, the Delaware Court may not uphold the shareholder vote on the pay deal. Tesla shares soared 6.7% premarket Thursday after rising 3.9% the day before the shareholder meeting.
Glass Lewis and Institutional Shareholder Services (ISS) urged shareholders to reject the remuneration package. Large investors, including Norway's sovereign wealth fund and U.S. pension funds, planned to vote no per earlier reports.
Tesla shareholders also decided to move Tesla's legal headquarters from Delaware to Texas and re-elect Kimbal Musk, Elon Musk's brother, and James Murdoch, Rupert Murdoch's son.
Tesla Says Elon Musk Deserves Pay Package
Marcie Frost, CEO of the California Public Employees' Retirement System, criticized the compensation deal for increasing Musk's shareholding while eroding other shareholders' shares.
Tesla has actively sought support for Elon Musk's compensation package from ordinary investors, who make up a large component of its ownership base but seldom vote. Tesla executives have commented on X about Musk's centrality to the company's performance, and Musk has given shareholders who vote personal visits to Tesla's Texas facility.
The board justified Musk's compensation deal by emphasizing his aggressive market value, revenue, and profitability goals. The board maintained that Musk's devotion to Tesla required the package, despite concerns from the Delaware judge and other investors.
Elon Musk has threatened to build AI and robotics technologies outside of Tesla if the 2018 compensation package fails to ensure enough voting control. Significant shareholders knew the danger of Musk departing as CEO exceeded the benefit of voting against the deal.
Tesla Chairwoman Robyn Denholm wrote to shareholders that the Delaware Court had scrutinized CEO Elon Musk's $56 billion compensation plan, authorized by 73% six years ago, per AP News. She noted that many Tesla investors favor Elon Musk's payment as he has not received payment for six years because of the Delaware Court decision.
Tesla may challenge the Delaware court verdict if it moves its legal home to Texas before voting on Musk's compensation package and submitting the papers in Austin. Texas courts might reapprove the compensation package because Tesla is a Texas-based business.
Elon Musk Facing Sexual Harassment Charge
Last month, attorneys for shareholder Richard Tornetta, who sued Musk to halt his compensation arrangement, filed arguments in Delaware to stop Tesla from transferring the case.Tesla assured the judge they would not transfer the case since it would still be a Delaware corporation at the shareholder vote.
In a separate update, Elon Musk is facing new court cases as former SpaceX engineers have sued him for sexual harassment and retaliation in California's state court. Employees believed the tech mogul committed these unpleasant activities "purposefully," creating a tense environment, as reported by TechTimes.
Eight former SpaceX engineers sued for sexual photos, jokes, and remarks against women and LGBTQ+ people. Other employees have also made nasty comments that have made them uncomfortable at work, emulating Musk's posts on his social media platform X.
