Tesla Investors Support $56bn Musk Pay Deal
Tesla shareholders have endorsed a record-setting pay package for CEO Elon Musk and approved the relocation of the company's legal headquarters to Texas.
Earlier this year, a Delaware judge had halted the deal due to concerns about its fairness to shareholders.
This approval marks a victory for Musk, who strongly advocated for the payout, potentially valued at up to $56 billion (£43.9 billion), contingent on Tesla's stock performance.
The package is estimated to be 300 times more than what the highest-paid executive in the U.S. earned last year. However, the vote is not binding, and legal experts suggest it remains uncertain whether the court that initially blocked the deal will recognize the re-vote and reinstate the pay package.
"The vote changes nothing," said Mathieu Shapiro, a managing partner at law firm Obermayer Rebmann Maxwell & Hippel.
"It only offers Tesla opportunities to try to use the vote to obtain a better decision going forward.
“It will be interesting to see if another court is willing to credit a vote taken after the trial court’s decision.”
The eye-popping sum had sparked criticism and raised concerns that the board of Tesla was too submissive and close to Mr Musk.
In the January court ruling, Delaware judge Kathaleen McCormick ruled the sum was "unfair" and the process for determining the package, by a board dominated by Mr Musk, was "deeply flawed".
Chancellor McCormick had pointed out that Antonio Gracias, who had been a board director at Tesla, had "the sort of personal relationship that had him vacationing with Musk’s family on a regular basis".
She also highlighted Todd Maron, Tesla's former general counsel, "who was Musk’s former divorce attorney and whose admiration for Musk moved him to tears during his deposition".
Mr Musk announced that he wanted to move the firm's legal headquarters to Texas after the court in Delaware, where it is currently incorporated, voided his pay package, siding with a small investor who had sued over the deal.
The fight over the plan had aired concerns about Mr Musk's leadership, at a time when Tesla's share price has fallen from its height and its position in the electric car industry is under pressure.
But Mr Musk rallied his fan base in support of the deal, appealing particularly to individual investors, who make up an unusually large portion of the firm's shareholder base.
"It's a pretty ringing endorsement," said car industry analyst Karl Brauer.
Elon Musk secured strong shareholder support for his record pay package, though the exact voting margin was not disclosed. Musk hinted at the results on his social media platform, X (formerly Twitter).
Following his announcement, Tesla shares rose nearly 3%. The compensation plan grants Musk rights to about 300 million shares, equivalent to a 10% stake in Tesla, as a reward for achieving various 2018 targets related to sales, profits, and the share price.
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