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Tesla’s top executive, Elon Musk, has been granted a massive $56 billion (£44 billion) compensation package, which was given the green light by the electric vehicle company’s shareholders.
Despite the objection from significant institutional investors and advisory services, the vote was in Musk’s favor.
In a display of his trademark positivity at the annual meeting in Austin, Texas, Musk proclaimed his ‘pathological optimism’, receiving thunderous applause. He declared, “If I wasn’t optimistic, this [the gigafactory] wouldn’t be here,” emphasizing his records of making good on promises.
Still, the approval won’t settle the ongoing concerns from a Delaware courtroom lawsuit which was deemed “unfathomable” and was invalidated by a judge in January. Some observers expect this litigation could stretch on for several months.
Additionally, Musk might find himself targeted by new legal actions tied to this record-breaking corporate payout, which initially got shareholder endorsement back in 2018.
A Boston College Law School professor, Brian Quinn, weighed in saying, “This matter is far from closed.” He noted the Delaware judge will need to thoroughly examine the fresh shareholder vote and confirm that it was not tainted by coercion or undue influence from Elon Musk or others.
A panoramic shot of the Tesla Gigafactory located in Austin, Texas, U.S., as seen on February 28, 2023. Image credit: Reuters/Go Nakamura
The question was raised regarding how tightly Elon Musk’s grip is on Tesla’s board members, with the Delaware judge criticizing the board’s possible predisposition towards Musk due to their “close personal and financial ties.” The shift in Tesla’s legal domicile from Delaware to Texas was another matter approved by shareholders.
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Proposals that won the shareholders’ vote also included the reappointment of board members, namely Kimbal Musk, Elon’s brother, and James Murdoch, son of media tycoon Rupert Murdoch. Additionally, proposals that aimed at enhancing stockholder powers by shortening board terms and simplifying the proposal voting process to a mere majority won the day.
Exact vote counts remain undisclosed but are anticipated to be public in the near future.
The shareholder’s meeting was widely followed, boasting a combined viewership exceeding half a million on the livestream on X, also owned by Musk, and around 40,000 on YouTube.
Despite a nearly 55% drop in Tesla stock since its peak in 2021, largely due to decelerating sales of electric vehicles, the stock ended Thursday on a positive note, climbing 2.9%.
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Frequently Asked Questions
What was the outcome of the Tesla shareholders’ vote regarding Elon Musk’s compensation plan?
Tesla shareholders have approved Elon Musk’s $56 billion compensation plan despite some opposition by large institutional investors and proxy advisory firms.
Will the court’s decision affect Elon Musk’s approved pay package?
The approved compensation plan is still subject to legal scrutiny from an ongoing lawsuit in a Delaware court, which previously invalidated the plan in January. The litigation process could continue for several months, and further lawsuits might emerge.
What changes did the shareholders vote for regarding the Tesla board?
Shareholders voted in favor of relocating Tesla’s legal base to Texas from Delaware and endorsed proposals that shorten board terms to one year and lower voting thresholds for passing proposals to a simple majority.
What is the status of Tesla’s stock price?
Tesla’s stock has suffered from a significant drop, falling about 55% from its peak in 2021. However, on the day of the shareholders’ meeting, the stock closed with a 2.9% increase.
