Tags: elon musk | tesla | 56 billion

Elon Musk Thanks Tesla Shareholders for $56B Payday

Elon Musk Thanks Tesla Shareholders for $56B Payday
Elon Musk attends the 10th Annual Breakthrough Prize Ceremony at Academy Museum of Motion Pictures on April 13, 2024 in Los Angeles. (Kevin Winter/Getty Images)

Thursday, 13 June 2024 12:11 PM EDT

Tesla shareholders were set to approve Elon Musk's $56 billion pay package in what is being seen as a thumbs-up to his leadership - and an enticement for keeping his focus on the electric vehicle maker.

Musk posted a chart on his social media platform X late Wednesday that showed the resolution - and another vote to move the company's legal home to Texas - were set to pass by wide margins, though shareholders are allowed to change their vote up to the start of the annual meeting.

A person familiar with the preliminary voting tally confirmed that Musk posted an accurate count of the figures. The result will be announced at a meeting at Tesla's headquarters in Texas at 4:30 pm ET (2030 GMT) on Thursday.


"Thanks for your support!" Musk said.

The Tesla CEO could still face a long legal fight to convince a Delaware judge who invalidated the package in January, describing it as "unfathomable." He may also face fresh lawsuits over Thursday's vote on the package, which dates from 2018 and would be the largest in U.S. corporate history.

Shareholder approval would serve as both an endorsement of Musk's tenure and an acknowledgment that investors don't want to risk the company's future. Tesla's share price has dropped about 60% from its 2021 peak as EV sales have slowed and Musk's attention has wavered between Tesla and other companies he runs.

"This vindicates Musk and allays some investor concerns around his waning interest in Tesla," said Sandeep Rao, senior researcher at Leverage Shares, which owns Tesla's stock.

Board chair Robyn Denholm said in a regulatory filing earlier this month that reinstating the pay package was necessary for "retaining Elon's attention and motivating him."

The board said Musk deserves the package because he hit all the ambitious targets on market value, revenue and profitability.

Tesla shares rose 3.6% in Thursday trading.

Major proxy firms Glass Lewis and Institutional Shareholder Services (ISS) had urged shareholders to reject the pay package, and large investors including Norway's sovereign wealth fund and major U.S. pension funds had said they would vote against it.

The pay package would enable Musk to strengthen ownership "at the expense of diluting the value of those belonging to other shareholders," Marcie Frost, CEO of the California Public Employees' Retirement System said.

Tesla has been drumming up support for Musk's pay package, especially from retail investors, who make up an unusually high percentage of its ownership base but who often do not vote. The source familiar with the figures said a combination of big institutional investors and retail investor votes were responsible for the support.

Tesla shareholders also cast ballots on other proposals including the move of its legal headquarters from Delaware to Texas, as well as the re-election of two board members: Musk's brother Kimbal Musk and James Murdoch, son of media mogul Rupert Murdoch.


While Musk is undoubtedly Tesla's driving force, and is credited with much of its success, the company's sales and profits have slowed. Some investors viewed the vote on Musk's pay as a test of confidence in his leadership.

Tesla's stock price has more than halved since hitting a peak in 2021, when Musk started selling billions of dollars' worth of his stake partly to help finance his purchase of Twitter, sparking concerns that he would be spread too thin. He now runs six firms, including rocket-builder SpaceX, social media giant X - formerly Twitter - and the artificial intelligence firm xAI, which Musk created in 2023.

Musk's outspokenness and knack for creating controversy have also weighed on Tesla's reputation and sales. The company has faced numerous lawsuits claiming it tolerated harassment of workers, which it denies.

Company executives have posted messages on X, saying Musk is critical to Tesla's success. Tesla has run social media ads, and Musk has promised a personal tour of Tesla's factory in Texas to some shareholders who cast votes.

Musk has threatened to build AI and robotics products outside Tesla if he fails to gain enough voting control, which requires the 2018 pay package to be approved.


The Delaware judge who ruled against the package criticized Tesla's board for being "beholden" to him, saying the plan was proposed by a conflicted board with close personal and financial ties to its top executive.

"Even if the shareholders do approve the old package, it is not clear that the Delaware court will allow that vote to be effective," said Adam Badawi, a law professor at UC Berkeley.

The board held the shareholder vote as a way to bolster its appeal of the ruling, in which the judge cited the board's failure to fully inform shareholders before approving the pay package in 2018.

"How the shareholders vote now doesn't really answer the question whether the board violated its duties in 2018, and that's the issue on appeal," Ann Lipton, a corporate law professor at Tulane University, said.

Musk may have to wait years to find out whether he will get his pay package restored as appeals wind their way up to Delaware's Supreme Court.

© 2024 Thomson/Reuters. All rights reserved.

Tesla shareholders are voting to approve a $56 billion pay package for Elon Musk and to move the electric vehicle maker's legal home to Texas, the CEO said on social media, adding that passage was by wide margins.
elon musk, tesla, 56 billion
Thursday, 13 June 2024 12:11 PM
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