Musk Says Tesla Investors Approved Pay Package, Move

But vote won't automatically restore $56B package
By Rob Quinn,  Newser Staff
Posted Jun 13, 2024 6:01 AM CDT
Musk Says Shareholders Approved $56B Pay Package
Elon Musk speaks with other delegates at an AI summit in England last year.   (Leon Neal/Pool Photo via AP)

Elon Musk appears to have scored a big win in the battle over his record-breaking Tesla pay package. In a post on X late Wednesday, the CEO shared a graphic showing that support for the pay package in a shareholder vote had passed the "guaranteed win" mark. "Thanks for your support," Musk wrote. The full result of the vote will be announced in a meeting Thursday at Tesla's headquarters in Austin, Texas. The pay package, worth around $56 billion, was voided by a judge in Delaware earlier this year.

  • Vote "sends a strong signal." The pay package was initially approved in a shareholder vote in 2018. The re-approval doesn't restore the package, but "it sends a strong signal that he has the broad support of Tesla's investors," the Washington Post reports.

  • The next step. Musk now has to persuade Judge Kathaleen McCormick of Delaware's Court of Chancery to reverse her ruling. Litigation could take months. "A vote by shareholders wouldn't cause an automatic reversal of Chancellor McCormick's decision. We are in uncharted waters here," Samantha Crispin, corporate attorney at Baker Botts, tells Reuters. In her January ruled, McCormick said the package was approved in a "deeply flawed" process involving directors who were not independent of Musk.
  • Corporate move has also been approved. While it won't take the pay package case out of Delaware, Musk said a shareholder resolution to shift Tesla's legal headquarters to Texas was also set to pass by a large margin, the BBC reports. "Welcome to a state that has neither a personal nor a corporate income tax," Texas Gov. Greg Abbott posted.

  • Investors bucked advice. Before the vote, advisory firms recommended that shareholders should vote against the compensation package, saying the size was excessive and Musk was distracted by other projects. Supporters said Musk deserved the package, which consists entirely of stock options, because he had met very ambitious performance goals. "Our answer is clear, loud and unequivocal: Tesla is better with Elon. Tesla is Elon," investor Ron Barron said, per the Post.
  • Lawsuit filed. The pay package was struck down as part of a shareholder lawsuit and a fresh lawsuit is challenging the shareholder vote, reports Reuters. Investor Donald Ball accuses Musk of using "strong-arm, coercive tactics," including a threat to build AI and robotics products outside of Tesla if his stake in the company wasn't at least 25%.
  • Stock jumps. CNBC reports that Tesla's stock price, which rose almost 4% in trading Wednesday, rose almost 7% in after-hours trading.
(More Elon Musk stories.)

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