Palo Alto, June 13, 2024, The Europe Today: In a decisive vote at Tesla’s annual shareholder meeting, shareholders approved the reinstatement of CEO Elon Musk’s record $44.9 billion (€41.8 billion) pay package, which had been previously nullified by a Delaware court earlier this year.
Despite opposition from some large institutional investors and proxy firms, the proposal to restore Musk’s compensation package passed, reflecting the robust support he enjoys among Tesla’s retail investors. This favorable vote, however, does not override the court’s ruling and does not imply Musk will immediately receive the all-stock pay reward.
Tesla shares rose following Musk’s announcement on X (formerly Twitter), which he also owns, expressing confidence that the pay plan would be approved. The outcome of the vote is seen as a strong indication of shareholder confidence in Musk’s leadership.
The lucrative stock award, originally approved by Tesla’s board and shareholders in 2018, was valued at up to $56 billion in Tesla stock at the time. Its value has since decreased in line with Tesla’s stock performance, being valued at $44.9 billion in an April regulatory filing.
Tesla has faced increasing competition in China, contributing to its stock decline over the past year. The pay package’s reinstatement is expected to remain entangled in the Delaware Chancery Court and Supreme Court for several months as Tesla seeks to overturn the earlier rejection by Delaware Chancery Court Chancellor Kathaleen McCormick.
In her January ruling, Chancellor McCormick described the pay package as “unfathomable,” siding with shareholders who challenged its approval. She concluded that Musk had essentially controlled the Tesla board when the package was ratified in 2018 and that shareholders were not fully informed during the approval process.
At the annual meeting, Musk reassured investors of his commitment to Tesla, emphasizing that he cannot sell any stock from the compensation package for five years. “It’s not actually cash, and I can’t cut and run, nor would I want to,” Musk stated, addressing concerns about his multiple side projects and affirming his dedication to the company.
The vote underscores the ongoing faith Tesla shareholders place in Musk’s leadership, despite the legal challenges and concerns raised by institutional investors. As the company navigates increased market competition and legal battles, Musk’s role remains pivotal in steering Tesla’s future.
