“Varney & Co.” host Stuart Varney discusses whether Elon Musk’s latest tech bet will pay off for investors.
Tesla CEO Elon Musk said shareholders have approved his $56 billion compensation package and are voting to relocate the electric car company from Delaware to Texas.
“Both Tesla shareholder resolutions have now passed by large margins! Thank you all for your support!!” Musk posted on X late Thursday, sharing a graphic showing that both votes met the threshold for passage.
Tesla shares rose 6.6% in U.S. pre-market trading on Thursday after rising 3.9% the previous day following reports that shareholders were giving a vote of confidence in Musk’s leadership.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| TSLA | Tesla Inc. | 177.29 | +6.63 | +3.88% |
But even if Musk wins the vote, Tesla’s board will have to fight in court to convince a Delaware judge who said it is “beholden” to Musk, and could face new litigation over the outcome.
Tesla asks shareholders to reinstate Elon Musk’s salary and move to Texas
Elon Musk, CEO of SpaceX and Tesla and owner of X, watches the Milken Conference 2024 Global Conference Session at the Beverly Hilton in Beverly Hills, California. (Reuters/David Swanson/Reuters Photo)
“Even if shareholders had approved the old package, it’s not clear that a Delaware court would recognize that vote,” Adam Badawi, a law professor at the University of California, Berkeley, told Reuters.
The results of the vote will be announced at 4:30 p.m. Thursday at Tesla headquarters.
Reuters reported, citing sources, that large institutional investors worked with individual investors to bolster the majority of votes in favor of the proposal.
Large shareholder proxy firms Glass Lewis and Institutional Shareholder Services (ISS) have urged shareholders to reject the pay package, and major investors including Norway’s sovereign wealth fund have said they will vote against it.
The results won’t be officially announced until Tesla’s annual meeting, before which shareholders have the opportunity to change their vote.
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Tesla CEO Elon Musk and a security guard leave the company’s local office in Washington on January 27, 2023. (Reuters/Jonathan Ernst/Reuters Photo)
Tesla shareholders also voted on a proposal to move the company’s legal headquarters from Delaware to Texas and to re-elect Musk’s brother, Kimbal Musk, and James Murdoch to the board of directors.
Texas Governor Greg Abbott congratulated Musk on his post with an X, saying, “Welcome to the state with no personal or corporate income taxes.”
Musk’s compensation, if paid, will be the highest ever paid by a US corporate CEO.
Tesla’s board proposed reinstating a compensation package that would have no salary or cash bonus but would offer compensation in the form of stock options that would be granted if Tesla’s market capitalization grows by up to $650 billion over the 10 years after 2018. The company’s current market capitalization is about $571.6 billion, according to LSEG data.
World’s largest wealth fund votes against Musk’s $56 billion compensation proposal
Tesla has asked shareholders to reaffirm their approval of Musk’s compensation plan. Financial Times interview Earlier this month, Tesla’s executive chairman, Robin Denholm, said Musk deserved to be paid because the company had met ambitious targets for sales and stock price.
However, Glass Lewis, a major American proxy advisory service, said last month: Tesla Shareholders The company rejected the staggering package, citing its “excessive size,” the impact of Musk’s stock option exercise and the company’s concentrated ownership.
Elon Musk, CEO of SpaceX and Tesla and owner of Twitter, gestures while attending the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center on June 16, 2023 in Paris, France. (Photo: Chesnot/Getty Images/Getty Images)
The report also noted that Musk’s “set of extremely time-consuming projects” has increased since the company acquired Twitter (now known as X). Musk, who serves as Twitter’s chief technology officer and chairman of the board, is also CEO of SpaceX and artificial intelligence company xAI, and is the founder of Neuralink and The Boring Company.
Musk has been Tesla’s CEO since 2008 and has been instrumental in the electric vehicle maker’s rise to prominence. Most Valuable Automobile Manufacturers In terms of market capitalization, Tesla is No. 2. He led the company from a $2.2 billion loss in 2018 to a $15 billion profit and increased vehicle production sevenfold, according to the Vote Tesla campaign website.
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The company has faced headwinds as consumer interest in EVs wanes, and Tesla Decreasing sales volume It was the first first quarter record in nearly four years.
In January, Delaware Judge Kathleen McCormick struck down the compensation package, saying the “unfathomable amount” was unfair to shareholders and had been negotiated by directors perceived to be beholden to Musk.
A shareholder vote would not automatically overturn McCormick’s decision, and Musk and Tesla could face months of litigation before a final decision is made.
Fox Business’ Michael Dorgan and Eric Revell and Reuters contributed to this report.
