Elon Musk has secured a significant victory as shareholders have endorsed his substantial pay package, potentially worth up to $56 billion, dependent on Tesla’s share price. Earlier this year, a judge in Delaware blocked the package, citing concerns it was unfair to shareholders.
“Hot damn, I love you guys,” Musk exclaimed to an enthusiastic crowd at the firm’s annual meeting in Texas. Despite the vote, which is non-binding, legal experts caution that the court may not accept this re-vote and allow the company to reinstate the package.
“The vote changes nothing,” said Mathieu Shapiro, 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,” he added.
The compensation plan had faced criticism for potentially excessive rewards and concerns over the board’s independence from Musk. Following the judge’s decision, Musk proposed moving Tesla’s legal headquarters to Texas, away from Delaware where the pay package was voided.
Musk, appealing to Tesla’s large base of individual investors, rallied support for the deal, which industry analyst Karl Brauer called “a pretty ringing endorsement.” The exact margin of the vote was not disclosed, but Musk hinted at the results on his social media platform, X, formerly known as Twitter, with shares closing nearly 3% higher.
The plan grants Musk approximately 300 million shares, around a 10% stake in the company, for meeting ambitious goals like achieving a $650 billion market value. Despite Judge Kathaleen McCormick’s ruling that the package was “unfair” and the board’s process “deeply flawed,” Tesla defended the package as aligned with shareholder interests.
“It will be interesting to see if another court is willing to credit a vote taken after the trial court’s decision,” noted Shapiro. Tesla executives echoed support for the package, underscoring Musk’s importance to the company.
Additionally, shareholders re-elected James Murdoch and Musk’s brother, Kimbal Musk, to the board, showing continued confidence in Tesla’s leadership.
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