Tesla shareholders have endorsed a record-breaking pay package for CEO Elon Musk and approved the relocation of the company’s legal headquarters to Texas.
Earlier this year, a Delaware judge had blocked the deal, raising concerns about its fairness to shareholders.
The approved package, worth up to $56 billion, depends on Tesla’s share price and has sparked controversy for being 300 times what the highest-paid US executive earned last year.
Elon Musk, addressing the enthusiastic shareholders in Texas, expressed his gratitude, saying, “Hot damn, I love you guys.”
Despite the approval, legal experts, including Mathieu Shapiro of Obermayer Rebmann Maxwell & Hippel, noted that the vote is non-binding and it remains uncertain whether the court that previously blocked the deal will accept the re-vote.
“The vote changes nothing,” Shapiro stated, suggesting that Tesla might use the vote to seek a more favorable decision moving forward.
The compensation package had drawn criticism, with concerns that Tesla’s board was overly submissive to Musk.
Delaware judge Kathaleen McCormick had deemed the sum “unfair” and criticized the process as “deeply flawed,” pointing out the close personal relationships between Musk and several board members.
Following the court’s ruling, Musk announced his intention to move Tesla’s legal headquarters to Texas.
Despite Tesla’s share price falling from its peak and facing increased competition in the electric car industry, Musk rallied individual investors, who form a significant portion of Tesla’s shareholder base, in support of the deal.
Car industry analyst Karl Brauer called the shareholder support “a pretty ringing endorsement,” adding that Musk received enough backing to justify the package.
Tesla did not disclose the vote margin immediately, but shares closed up nearly 3% after Musk’s announcement on his social media platform, X (formerly Twitter).
The compensation plan awards Musk approximately 300 million shares, equivalent to a 10% stake in the company, contingent on meeting goals related to sales, profits, and the share price set in 2018.
Tesla had claimed these goals were challenging, though the lawsuit that led to the Delaware court’s intervention alleged they mirrored internal growth projections shared with banks.
Brauer remarked on the impressive appreciation of Tesla stock, saying, “My understanding is that there’s been about 1,100% appreciation in Tesla stock. And that’s pretty, pretty impressive. Most chief executives have never done anything like that.”
Georg Ell, Tesla’s former director for Western Europe, supported the payout, stating that investors would be pleased with the significant return on investment.
Ell, who holds a small shareholding in Tesla, worth around £6,000, noted that the vote outcome strongly validates Musk’s leadership.
“At Tesla of course he doesn’t do it all alone but he definitely sets the agenda, he sets the pace and he is a relentless person to work for, there’s no doubt about that,” Ell said.
At the same meeting, shareholders re-elected two board members, James Murdoch and Kimbal Musk, Elon Musk’s brother.
Source-BBC
