Tesla shareholders are approving $56B pay package, claims Elon Musk
Tesla shareholders are voting in favor of the $56 billion pay package for CEO Elon Musk, as well as relocating the company's legal headquarters to Texas, according to Musk. He announced the news on X, stating that both "resolutions are currently passing by wide margins!" The results of the vote are expected to be announced at a meeting later today. The approval of the pay package is seen as a crucial test of confidence in Musk's leadership.
Take a look at Musk's post
Why does this story matter?
The $56 billion pay package is the same one that was previously rejected by a Delaware judge. The judge invalidated it as an "unfathomable sum" granted by a conflicted board with close personal and financial ties to its top executive. The board is now using the shareholder vote as a way to bolster its appeal of the ruling. Musk has threatened to build AI and robotics products outside Tesla if he fails to gain enough voting control.
Shareholders can change their vote until annual meeting
A preliminary count, confirmed by an insider to Reuters, revealed that a mix of large institutional investors and retail investors pushed the 'yes' vote over the line. However, shareholders have the flexibility to change their vote until the start of the annual meeting. In addition to the pay package, shareholders are also voting on other proposals including the relocation of Tesla's legal headquarters from Delaware to Texas and the re-election of two board members.
Musk's pay package seen as crucial for Tesla's future
The vote on Musk's pay package is seen as a crucial test of confidence in his leadership. While he is undoubtedly Tesla's driving force and is credited with much of its success, the company has recently experienced a slowdown in sales and profits. The board has defended the pay package. Last week, Tesla's board chair, Robyn Denholm, urged shareholders to approve Musk's pay package, warning that failure to approve the package could lead to his departure from the company.
Musk's pay package faces opposition from large shareholders
Despite the board's support, some major shareholders, including Norway's sovereign wealth fund and California's two largest pension funds, have expressed their intention to vote against the compensation. They argue that the pay is excessive. In May, two major shareholder advisory firms, ISS and Glass Lewis, recommended voting against the package. However, Tesla and Musk have been actively campaigning for approval of the package through social media posts, television appearances, and proxy filings with the US Securities and Exchange Commission.
