Tesla investors approve of the $56 billion compensation agreement for Musk
Tesla shareholders have endorsed a historic compensation package for CEO Elon Musk and approved a plan to relocate the company’s legal headquarters to Texas. The initial deal faced opposition earlier this year from a Delaware judge who deemed it unfair to shareholders.
Musk, who passionately advocated for the payout valued at up to $56 billion, expressed gratitude to enthusiastic shareholders gathered at Tesla’s annual meeting in Texas, stating, “Hot damn, I love you guys.” This compensation exceeds the earnings of the highest-paid CEO in the US last year by over 300 times and surpasses the average CEO’s pay package by more than 3,000 times.
Despite the shareholder vote being a non-binding resolution, legal experts question whether the Delaware court will accept the results and reinstate the pay package. Mathieu Shapiro from Obermayer Rebmann Maxwell & Hippel noted, “The vote doesn’t change anything legally; it simply allows Tesla to leverage the vote in future proceedings.”
Critics raised concerns over the staggering sum and alleged cozy relationships within Tesla’s board, highlighted during the Delaware court proceedings. Judge Kathaleen McCormick previously ruled the process for determining Musk’s compensation was flawed, citing board members with personal ties to Musk.
Following the Delaware court’s decision, Musk announced intentions to move Tesla’s legal headquarters to Texas, prompting further scrutiny over his leadership amid challenges in the electric car industry.
Despite the controversy, Musk garnered strong support from shareholders, securing 72% of votes cast in favor of the compensation plan, similar to the approval rate in 2018. Analyst Karl Brauer described the result as “a pretty ringing endorsement” of Musk’s leadership and vision for Tesla.
The approved compensation plan grants Musk rights to approximately 300 million Tesla shares, equivalent to a 10% stake, contingent on the company meeting performance targets set in 2018. Tesla maintains these targets are ambitious but achievable, though critics argue they align closely with internal growth projections shared with banks.
Supporters argue that Musk’s leadership has been instrumental in Tesla’s success, justifying the substantial compensation package. Former Tesla executive Georg Ell highlighted the significant returns investors have seen under Musk’s tenure, underscoring the CEO’s pivotal role in the company’s growth.
At the shareholders’ meeting, James Murdoch and Kimbal Musk were also re-elected to the board, reinforcing continuity in Tesla’s governance amid these pivotal decisions.
Overall, while the shareholder vote marks a significant endorsement for Musk, the ultimate legal and financial implications remain uncertain pending further court deliberations.
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