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Tesla shareholders voted to reinstate the company on Thursday. CEO Elon Musk The $56 billion compensation package was voided by a Delaware judge and the company’s state of incorporation was changed from Delaware to Texas.
Electric car maker Tesla held its annual shareholder meeting in Austin, Texas, on Thursday, where shareholders announced they approved Musk’s compensation package, according to preliminary results released by the company’s legal counsel at the meeting. Shareholders also voted to reincorporate Tesla as a company based in Texas instead of Delaware.
Musk suggested shareholders were likely to approve the proposals that same day, posting a chart on his Twitter account showing that the number of votes in favor of both proposals had risen above the “certain win” threshold in recent days. “Both Tesla shareholder proposals are now on their way to passing by wide margins! Thank you for your support!” he wrote in his Twitter post.
Tesla Shareholders The $56 billion compensation package was first approved in 2018. The compensation plan does not include a salary or bonus, but rather provides compensation in the form of stock options that will be granted if Tesla’s market capitalization grows by up to $650 billion over the 10 years from 2018.
Tesla CEO Elon Musk’s $56 billion compensation package has been reinstated by the company’s shareholders. (Etienne Laurent/AFP via Getty Images/Getty Images)
Musk says shareholders support $56 billion compensation package
The $56 billion figure refers to the aggregate value of the compensation plans, which were based on the value of Tesla’s stock at the time the litigation was ongoing — a value that fluctuates with the price of Tesla’s stock, so the company put the value at $44.9 billion in its proxy statement.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| TSLA | Tesla Inc. | 182.47 | +5.18 | +2.92% |
Musk began his speech at the annual meeting by thanking shareholders, saying, “Let me start by saying: I love you guys!”
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Musk’s compensation consists of stock options that are awarded based on the company’s performance. (Chesnot/Getty Images/Getty Images)
In late January, a Delaware judge invalidated the compensation plan following an investor lawsuit, ruling that Tesla’s board failed to adequately disclose potential conflicts of interest given some directors’ close personal ties to Musk, and that it failed to inform shareholders that Tesla was on track to meet many of the plan’s performance-based goals.
In response to the ruling, Musk asked shareholders to change Tesla’s state of incorporation from Delaware to Texas, where the company is headquartered.
The Delaware judge’s ruling remains in effect despite the shareholder vote, but a statement of support for the compensation plan could have an impact on appeals and future litigation on the issue.
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Proxy advisory firms including Glass Lewis and Institutional Shareholder Services opposed approval of the compensation package, as did the California Public Employees’ Retirement System (CalPERS) and New York City Comptroller Brad Lander.
Reuters reported that Lander responded to Musk’s announcement before the meeting, saying, “Elon’s tweet is further evidence of a failure of corporate governance at Tesla. Shareholder votes should never have been made public. As long-term Tesla investors, we expect true board oversight and a CEO who is deeply committed to growing the company rather than other businesses.”
Shareholders who vote to reinstate Musk’s compensation package may also consider appeals and other litigation arising from a Delaware court ruling that invalidated the compensation plan. (Qilai Shen/Bloomberg via Getty Images/Getty Images)
Tesla’s board of directors recommended shareholders support the proposal, which was also backed by the Florida Pension Board and prominent investor Ron Baron, founder of Baron Capital.
“People invest in Tesla because they believe in Elon and the company,” Christopher Tsai, president and chief investment officer at Tsai Capital, told Reuters. “Nothing has changed since the last vote. Pay him and move on, that’s the shareholders’ conclusion.”
“Congratulations Elon on receiving your promised salary and incorporating in Texas! Welcome to a state with no personal or corporate income taxes,” Republican Texas Governor Greg Abbott said in a post on X.
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Tesla shares rose 2.92% during Thursday’s trading session and rose another 0.71% in after-hours trading.
FOX Business’ Kelly O’Grady and Chris Pandolfo and Reuters contributed to this report.
