On June 13, Elon Musk, the CEO of Tesla, stated that he anticipates shareholders to vote in favor of reinstating his $56 billion compensation package. The outcome of the vote is scheduled to be disclosed later in the day on Thursday.
On Wednesday evening, Musk, the owner of X, announced that the pay package reinstatement and the decision to shift Tesla’s incorporation from Delaware to Texas were passing with significant support.
The news caused a surge in Tesla stocks, which rose by almost 7% during premarket trading on Thursday morning.
The company’s annual meeting is scheduled to announce the voting results at 4:30 p.m. EDT.
Despite facing opposition from major investors such as the California State Teachers’ Retirement System and Norway’s Sovereign Wealth Fund, Elon Musk announced his victory in reinstating his pay package. The resolution was also met with opposition from proxy advisory firms Glass Lewis and Institutional Shareholder Services who advised shareholders to vote against it. However, Musk remained undeterred and declared success despite the challenges.
Although the vote has taken place, it is important to note that it is not legally binding. As a result, there may be potential legal challenges, including from the Delaware court that initially ruled against it.
In an April proxy filing, Tesla declared its intention to present the vote to shareholders. The court’s decision to invalidate the pay package was labeled as a “fundamental problem for the company” and deemed to have circumvented the will of an “overwhelming majority of shareholders” who had previously voted in favor of it.
In January, Chancellor Kathleen McCormick of the Delaware Chancery Court ruled that Musk’s compensation package was “unfair.” She agreed with shareholder Richard Tornetta’s complaints, stating that Musk held too much control to set the rules and price.
When the ruling was made, Musk had expressed his desire to expand his ownership of Tesla stock from 13% to 25%, with the aim of furthering his work on artificial intelligence.
In response to the ruling, he expressed his frustration by posting on X and urging others to avoid incorporating their companies in the state of Delaware. He even took it a step further by conducting a poll asking if the company should relocate its incorporation to Texas.
Tesla has recently seen a decrease in its workforce due to layoffs, as it faces tough competition in the electric vehicle market, especially from China. Despite supporters of Musk, who believe he is crucial to the company’s future success, there are also critics who argue that Musk has become distracted following his acquisition of X and the launch of his own artificial intelligence company, xAI.
