Elon Musk's record-breaking compensation package and the company's intention to relocate its legal headquarters to Texas were approved by Tesla shareholders.
The billionaire, who had fought hard for the payoff, which may be worth up to $56 billion depending on the price of Tesla shares, is pleased with the outcome.
He exclaimed, "Hot damn, I love you guys," to an ecstatic group of shareholders who had assembled in Texas for the annual meeting of the company. The staggering amount has drawn criticism and worries about the company's board being too obedient and close to Mr. Musk.
Earlier this year, a Delaware court invalidated the package, taking the side of a minor investor who had filed a lawsuit against the transaction. Amidst pressure on the company's position in the electric vehicle business and a decline in its share price, the dispute over the plan raised questions about Mr. Musk's leadership.
However, Mr. Musk mobilized his supporters to back the acquisition, winning over individual investors in particular who account for an exceptionally high percentage of the company's shareholder base. Karl Brauer, an expert for the auto business, called it "a pretty ringing endorsement." More than enough support from shareholders was obtained by Mr. Musk "to justify the package," he said. The voting margin was not immediately made public by the firm. In an announcement on his social media platform, X—formerly known as Twitter—Mr. Musk gave a sneak peek at the outcomes.
Following Mr. Musk's statement, the company's shares finished over 3% higher.
Wedbush Securities analyst Dan Ives said that the gains showed investor confidence in the deal's success, lowering the possibility that Mr. Musk would depart the firm. "In a nutshell, if this proposal went south a lot of bad things including scenarios might have taken place including Musk beginning a path to not being CEO of Tesla," he said in an email. According to the pay plan, if the company reaches milestones that were previously thought to be impossible, such becoming a $650 billion company, Mr. Musk will be entitled to around 300 million shares, or 10% of the company.
According to what I gather, Tesla stock has appreciated by around 1,100%. And that's really very amazing. Mr. Brauer said, "Most CEOs have never done something like that. Legal experts have said that the vote is non-binding and that it is unclear if the court that halted the contract would accept the re-vote and permit the business to reinstate the compensation package.
Mathieu Shapiro, a managing partner at Obermayer Rebmann Maxwell & Hippel, said that "the vote changes nothing." "It only offers Tesla possibilities to try to use the vote to gather a better decision going forward," he said.
Judge Kathaleen McCormick said earlier this year that the amount was "unfair" and that the committee, which was presided over by Mr. Musk, had used a "deeply flawed" procedure to determine the package. * "Fundamentally unfair, and inconsistent with the will of the stockholders" was how Tesla described the ruling.
After that, the business put the agreement to a second vote and requested support from its shareholders for a proposal to reorganize the business outside of Delaware. The board said that it was imperative to guarantee that Mr. Musk stays committed to the firm and that he earned the package as it was under his leadership that Tesla met its lofty goals. In social media postings, Tesla executives also endorsed the package, stating that Elon Musk is essential to the company's success.
In the meanwhile, Mr. Musk assured some shareholders who voted that they would get an intimate tour of Tesla's Texas facility. 73% of shareholders who voted six years ago supported the package, which is believed to be worth 300 times more than the salary of the top-earning CEO in the US earned last year. At the meeting on Thursday, shareholders also backed the re-election of two board members: Mr. Musk's brother Kimbal Musk as well as James Murdoch, the son of media billionaire Rupert Murdoch.
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