Tesla shareholders have overwhelmingly voted in favor of a $56 billion pay package for CEO Elon Musk and the relocation of the company’s legal headquarters to Texas, Musk announced on social media Wednesday. Expressing gratitude, Musk acknowledged the broad support for the measures, which are poised to be the largest remuneration terms in U.S. corporate history.
The robust approval from shareholders is seen as pivotal in assuaging concerns about Musk’s future at Tesla and strengthening the company’s position in its legal battles, particularly to overturn a court decision that nullified the original pay package.
Tesla’s stock surged 6.6% in premarket trading following the news, building on a 3.9% gain from the previous day. However, legal hurdles remain, with a Delaware judge questioning the independence of Tesla’s board in relation to Musk.
The final outcome of the shareholder vote will be announced at Tesla’s headquarters in Texas at 4:30 pm (2130 GMT) on Thursday. Sources familiar with preliminary voting results highlighted a combination of institutional and retail investor support as instrumental in securing the majority ‘yes’ votes.
Major proxy advisory firms such as Glass Lewis and Institutional Shareholder Services had recommended against approving the pay package. Nevertheless, Tesla executives and Musk himself actively campaigned for the proposal, engaging with shareholders through social media and offering incentives like factory tours.
The contentious vote also included decisions on relocating Tesla’s legal domicile and re-electing board members, including Musk’s brother Kimbal Musk and James Murdoch.
Critics argue that the pay package could concentrate ownership further in Musk’s hands, potentially diluting the value for other shareholders. Despite these concerns, Tesla’s board insists the package is essential to retain Musk’s commitment amid his involvement in various ventures beyond Tesla, including SpaceX and X – formerly Twitter.
The approval marks a significant milestone for Tesla and Musk, underscoring both the support for Musk’s leadership and the challenges ahead in navigating ongoing legal battles over executive compensation and corporate governance.
