One of the largest compensation packages in US business history, Elon Musk’s $56 billion pay package was approved by Tesla shareholders. On Wednesday, Musk made the announcement on the social networking platform X. As part of the decision, the manufacturer of electric vehicles would move its legal headquarters to Texas. Musk added in his letter, “Thanks for your support!!” to show his appreciation for the assistance.
Investor concerns regarding Musk’s future at Tesla may be allayed by the shareholder approval, providing the company with leverage to fight a recent court decision that reversed the compensation package. Musk will have a difficult time convincing the Delaware judge who previously rejected the package because of Musk’s inappropriate influence on the Tesla board, even with the overwhelming support. Legal professionals caution that the most recent shareholder vote might not be recognized as valid by the Delaware court.
The results will be revealed on Thursday at 4:30 p.m. (2130 GMT) at Tesla’s Texas headquarters. Initial findings indicated strong support from both institutional and individual investors. The ‘yes’ vote was successful in spite of opposition from important investors including Norway’s national wealth fund and notable proxy firms like Glass Lewis and Institutional Shareholder Services (ISS).
The reelection of James Murdoch and Kimbal Musk to the board, along with a change of legal domicile to Texas, were among the other recommendations that were debated during the meeting. Thanking Tesla for its legal maneuvering, Texas Governor Greg Abbott highlighted the absence of personal and corporate income taxes in the state.
A vote on Musk’s leadership was perceived by several investors as a result of the decision on his pay. Although Musk receives a lot of credit for Tesla’s achievements, his involvement in a number of projects, such as SpaceX and the social network startup X, has sparked concerns about his dedication to Tesla. The company’s stock increased 3.9% on Wednesday ahead of the shareholder meeting, despite having dropped by more than 60% since its 2021 peak.
Notwithstanding his contentious persona, Musk’s guidance is seen as indispensable to Tesla. The board defended Musk’s substantial compensation package by highlighting his achievement of ambitious goals in terms of market value, sales, and profitability. They said that, despite his involvement in other ventures, Musk’s commitment to Tesla needed to be preserved, which is why the package was necessary.
The purpose of the shareholder vote is to bolster Tesla’s appeal against the Delaware court’s ruling, which criticized the 2018 pay package for lacking sufficient transparency for shareholders. The board’s close relationship with Musk brought conflicts of interest to light, as the court’s verdict made clear.
As the appeals process unfolds, Musk’s attempts to restore his compensation package may take months or perhaps years. The lengthy legal battle sheds light on the difficulties with executive pay and corporate governance at one of the biggest producers of electric vehicles globally.
