Tesla shareholders poised to approve Elon's compensation
Tesla shareholders were poised to approve Elon Musk's $56 billion pay package, signaling a strong endorsement of his leadership and a strategy to keep his focus on the electric vehicle manufacturer. Musk shared a chart on his social media platform X late Wednesday, indicating that both the resolution and a separate vote to relocate the company’s legal headquarters to Texas were set to pass by wide margins. Shareholders could still change their votes up until the start of the annual meeting.
A source familiar with the preliminary voting confirmed the accuracy of Musk's posted figures. The final results were scheduled to be announced at Tesla's headquarters in Texas at 4:30 p.m. EDT (2030 GMT) on Thursday.
"Thanks for your support!" Musk wrote.
Despite this shareholder approval, Musk still faces a legal battle to convince a Delaware judge who invalidated the pay package in January, calling it "unfathomable." He may also face new lawsuits regarding Thursday's vote on the package, which dates back to 2018 and would be the largest in U.S. corporate history.
Approval from shareholders would serve as both an endorsement of Musk's tenure and a signal that investors do not want to jeopardize the company's future. In January, Musk threatened to develop AI and robotics products outside of Tesla if he didn't gain enough voting control, essentially requiring approval of the 2018 pay package. He has shifted the company's focus to robotaxis, moving away from cheaper mass-market electric cars, a move that has concerned some investors worried about the challenges of perfecting autonomous technology.
Tesla's share price has dropped about 60% from its 2021 peak as EV sales slowed and Musk's attention wavered between Tesla and other companies he runs. However, Tesla shares rose 3.8% on Thursday afternoon.
"This vindicates Musk and allays some investor concerns around his waning interest in Tesla," said Sandeep Rao, senior researcher at Leverage Shares, which holds Tesla stock.
Board chair Robyn Denholm stated in a regulatory filing earlier this month that reinstating the pay package was essential for "retaining Elon's attention and motivating him." The board argued that Musk deserves the package because he achieved all ambitious targets related to market value, revenue, and profitability.
Major proxy firms Glass Lewis and Institutional Shareholder Services had urged shareholders to reject the pay package, and large investors including Norway's sovereign wealth fund and major U.S. pension funds had announced they would vote against it.