Tesla shareholders approved CEO Elon Musk’s $56 billion pay plan, the electric vehicle maker said Thursday, a big congratulations to its leadership and an incentive to focus on its biggest source of wealth.
The payment package garnered about 77 percent of the votes cast at the annual shareholder meeting, according to a document filed through the company on Friday. That’s a four percentage point increase since the 2018 vote on the pay package. , which was overturned in January by a Delaware ruling that called it “unfathomable. “
Shareholders also submitted a proposal to move the company’s legal headquarters from Delaware to Texas, Tesla said at its annual shareholder meeting in Austin.
Musk had announced last Wednesday that the proposals had met with great success and thanked shareholders. A graphic on its X social media platform showed that the resolutions were going to be widely adopted.
The endorsement also highlights what Musk enjoys about Tesla’s retail investor base, many of whom are ardent enthusiasts of the mercurial billionaire. The proposal was approved despite opposition from some giant institutional investors and proxy companies.
The Tesla CEO could still face new lawsuits over this project, which would be the largest in the history of an American company.
Shareholder approval for the refund is either an endorsement of Musk’s mandate or an acknowledgment that investors are unwilling to threaten the company’s future.
In January, Musk threatened to build artificial intelligence and robotics products outside of Tesla if he failed to gain enough voting control, which necessarily required approval of the pay package.
He redirected the company toward robotaxis, abandoning conventional electric cars, to the chagrin of some investors who feared autonomous generation would be difficult to perfect.
Tesla’s inventory value has fallen about 60% from its 2021 peak as electric vehicle sales have slowed and Musk has vacillated between Tesla and the other corporations he runs. The stock closed up 2. 9% on Thursday.
“This proves Musk right and alleviates some investor concerns about their waning interest in Tesla,” said Sandeep Rao, senior researcher at Leverage Shares, which owns Tesla shares.
The board said Musk deserved this package because he had met all ambitious targets for market value, revenue, and profitability. The main investors, the California Civil Servants Retirement System, had called the salary program “excessive. “
Musk and Telsa Chairman Robyn Denholm “made this about the CEO’s loyalty and framed the votes as a resolution that the company can keep Musk. That’s a lot of pressure,” Ivan Frishberg, chief sustainability officer at Telsa, told Reuters. Amalgamated Bank. opposed the salary proposal, raising considerations about Tesla’s lack of independence and corporate governance.
Tesla has gotten help for Musk’s salary package, specifically among retail investors, who make up an unusually high percentage of his ownership base but don’t vote.
Company executives posted messages in X that Musk is critical to Tesla’s success. Tesla ran classified ads on social media, and Musk promised a private tour of Tesla’s Texas factory to some shareholders who voted.
While Musk is undoubtedly Tesla’s driving force and is credited with much of its success, the company’s sales and profits have slowed. We are concerned that it will go on too long.
Musk has added two more corporations to his list since the pay program was approved in 2018. He now runs or owns six corporations, in addition to rocket maker SpaceX, social media giant xAI synthetic intelligence, which Musk created in 2023.
The endorsement suggests that shareholders “believe that he is the only user who has the most productive strategy to implement in the future,” said Jason Schloetzer, a business professor at Georgetown University in Washington and an expert on corporate governance.
“They are necessarily ignoring other people’s key risks, while Tesla is even more dependent on Musk in the future,” he said, mentioning the departures of high-profile executives in recent months.
Kathaleen McCormick, the Delaware judge over who ruled against the project, criticized Tesla’s board of directors for being “beholden to him,” saying the plan was proposed by a conflicted board with close personal and financial ties to its most sensible executive.
The board held the shareholder vote on its appeal of the ruling, in which the ruling cited the fact that the board failed to fully inform shareholders before approving the pay package in 2018.
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