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Tesla Shareholders Reapprove Elon Musk’s Massive Compensation Package

Tesla shareholders voted to reapproval CEO Elon Musk’s huge compensation package, despite a Delaware judge ruling it invalid earlier this year.

The Verge Reports In the vote, widely seen as a referendum on Musk’s leadership at a turbulent time for the electric car giant, investors also approved moving Tesla’s legal headquarters from Delaware to Texas and the reappointment of James Murdoch and Elon Musk’s brother, Kimbal Musk, to the board of directors.

Elon and Kimbal Musk (Elon Musk Archive/YouTube)

Tesla has faced numerous challenges in recent months, including declining sales, weak demand, and declining profits. The company has also implemented major layoffs affecting at least 10% of its workforce. Additionally, Tesla’s vehicle lineup is aging and in need of an overhaul, and it’s unclear whether Musk’s efforts in AI and robotics will be successful.

Breitbart News reported in April:

Piper Sandler’s Alexander Potter sees Tesla deliveries falling 0.5% in 2024 to just under 1.8 million units. Jefferies’ Philippe Houchois similarly sees deliveries falling about 3% to 1.77 million units. The gloomy outlook comes on the heels of disappointing first-quarter deliveries from Tesla, which fell short of consensus estimates by the widest margin going back seven years, according to Bloomberg data. That’s especially surprising given that Tesla is the country’s most prominent EV maker and has been boasting big sales gains.

Analysts say slowing growth is a big concern for the electric-vehicle maker. “Growth is slowing, and it’s not going away anytime soon,” Potter said in an April 9 report. He thinks Tesla should be able to overcome its demand issues by 2026, and he expects production of lower-priced vehicles and the Cybertruck to ramp up. And more than half of his price target comes from his bullish view of the company’s driver-assistance software.

Despite these obstacles, Tesla shareholders showed their unwavering support for Musk by approving a compensation package that cemented his status as one of the highest-paid chief executives in modern history. “First of all, I want to say I love you all,” Musk exclaimed as he took the stage in victory.

The outcome of the vote was driven by several factors. Shareholders wanted to reward Musk for transforming Tesla into the world’s most valuable car company, creating enormous wealth for investors in the process. They also wanted to push back against critics who have questioned Musk’s leadership choices in recent years as he has split his attention among a variety of ventures, including the company formerly known as Twitter.

Tesla’s unique shareholder structure as a cult stock, with a higher proportion of individual investors compared to large institutional investors, played a major role in the vote’s outcome: major proxy advisory firms recommended voting against the proposal, but Tesla’s individual shareholders were adamant in support.

Recent controversies, including allegations of sexual misconduct against Musk at SpaceX and sexual harassment lawsuits filed by fired employees, also did not sway the vote. Moreover, Musk’s political shift to the right did not deter investors, many of whom were hesitant to risk a sharp drop in the stock price if their compensation package was rejected.

But a Delaware court ruling striking down Musk’s compensation package for undue influence remains in effect. Today’s vote is part of an unorthodox strategy by Tesla to fix flaws in a process that began in 2018. “Just because shareholders approved it doesn’t mean it’s automatically reinstated. I would imagine there will be influence,” said Samantha Crispin, a partner at Baker Botts. [and] That’s certainly something the judge will take into consideration.”

Tesla hopes the reauthorization will aid its efforts to overturn the Delaware Chancery Court’s ruling, possibly through an appeal to the state Supreme Court. The company acknowledged that the outcome is uncertain, saying in its proxy statement that “in these new circumstances, we cannot predict with any certainty how the vote to approve Mr. Musk’s compensation will be treated under Delaware law.”

Click here for details The Verge is here.

Lucas Nolan is a reporter for Breitbart News covering free speech and online censorship.