Tesla Shareholders Approve Elon Musk’s $56 Billion Pay Package
During Tesla’s annual shareholders meeting, held on Thursday, shareholders approved Elon Musk’s $56 billion pay package. This decision was met with cheers from the attendees. In 2018, Tesla agreed to pay Musk this multi-billion dollar performance-based payout, on the condition that the company reached a valuation of $56 billion within a 10-year period.
However, this payment package plan faced opposition when a Tesla shareholder filed a lawsuit against the company, claiming the payout was excessive. In January, a Delaware court ruled against Musk, throwing out the plan. Chancellor Kathaleen McCormick found that Tesla’s board of directors had essentially agreed to Musk’s own proposal, which she described as “the largest potential compensation plan in the history of public markets.” She further concluded that the board violated their obligations to Tesla’s shareholders in the process.
McCormick’s ruling also highlighted that shareholders had been misinformed and misled regarding certain factors surrounding Musk’s pay package. This lack of transparency further weakened the board’s case for the substantial compensation package. Musk himself expressed his dissatisfaction with the court’s decision, taking to Twitter to criticize Delaware as a state for incorporating companies and recommending other states like Nevada or Texas.
Despite the setback with Musk’s pay package, Tesla shareholders displayed their confidence in the company by approving its redomestication from Delaware to Texas during the meeting. This move signifies support for Tesla amidst a challenging year for the company. Tesla faced a recall and production halt for its Cybertruck due to a design flaw that caused some drivers’ acceleration pedals to get stuck while accelerating. Additionally, the company experienced a slowdown in EV car sales and reported poor quarterly results, leading to a 10% reduction in its workforce.
Prior to the annual shareholders meeting, Musk expressed optimism on Twitter, stating that voting was already going in his favor. He claimed that both Tesla shareholder resolutions, including his pay package, were passing by wide margins and thanked supporters for their backing.
Overall, despite the legal obstacles and operational challenges faced by Tesla, the approval of Musk’s pay package and the redomestication vote indicate a vote of confidence from shareholders. This shows that they believe in the long-term potential and success of the company, despite the hurdles it currently faces.