Tesla shareholders voted to re-approve CEO Elon Musk’s pay package once worth $56 billion and reincorporate the Texas electric vehicle maker, giving him key wins as sought to reassert control of the company.
Preliminary results were announced at by Tesla annual meeting in Austin on Thursday, will strengthen the company as it tries to overturn a Delaware court’s January decision to void its 2018 stock options package – the largest in history United States – due to concerns about its value and the independence of the Table.
While the vote does not replace the court’s decision, ratification can be instrumental in convincing a judge to reverse or modify his or her position. Musk’s control over the company will be tightened, raising the executive’s stake to more than 20% from the current 13%.
After polls closed shortly after 4 p.m. in Austin, musk appeared on stage to greet a raucous crowd chanting his name, jumping up and down in celebration in front of a blue and pink neon sign depicting Texas.
“Fuck, I love you guys,” he told the audience of carefully selected retail investors. “We have the greatest shareholder base of any public company. . . We are not starting a new chapter but opening a new book.”
The CEO happily cracked a joke, noting in his speech “you know what, it’s 4:20 p.m.,” recalling a tweets in 2018 about taking Tesla private at $420 per share. Many people interpret this price in relation to April 20, with April 20 being celebrated by marijuana smokers.
The “virtual roundup” event was the culmination of a months-long campaign by Musk and his board to rally shareholders behind two resolutions, amounting to a referendum on the possibility of The capricious leader of one of the world’s richest men.
The votes also confirm Tesla’s repositioning as an artificial intelligence and robotics company. Musk, he claimed, has expanded his plans to develop a connected vehicle fleet of millions of fully self-driving cars and outlined a future with tens of billions of humanoid robots, which together could boost Tesla’s revenue. to a trillion dollars or more.
Tesla’s mobilization of retail investors is especially important because they own about 30% of the stock, an unusually high percentage for a public company. Musk also successfully lobbied institutional investors to go against it instruct by proxy advisers ISS and Glass Lewis, who criticized his salary as “excessive” and “excessive”.
In another victory, two key Musk allies on the board were re-elected over the objections of proxy advisors: former 21st Century Fox executive James Murdoch and Musk’s brother, Kimbal.
The victories were not unexpected after Musk posted X on Wednesday night, both resolutions “have now passed by wide margins!”
Tesla shares rose 3% on Thursday after his post, but the stock’s recent performance has been disappointing. It has fallen 29% over the past year, leaving it valued at $571 billion, now closer to JPMorgan and Walmart than its fellow “Magnificent Seven” tech giants like Microsoft and Nvidia, which are worth worth more than 3 trillion USD.
The drop also means Musk’s 2018 stock options are worth $48 billion compared to $56 billion previously.
Still, the results are a vindication for previously taciturn Tesla president Robyn Denholm, who was appear as a shareholder voice in a social media outreach campaign over the past few months. She leaned heavily on the “a deal is a deal” slogan, arguing that Musk hit stock price and financial targets in a 2018 package that were initially considered “ridiculously ambitious.”
Her reputation was threatened after being criticized by a Delaware judge for having a “lackadaisical approach to her oversight duties” and running a board that acted as “supine servants of an unreasonable boss”.
Behind the scenes, Denholm warned asset managers that Tesla risked losing Musk if he did not receive his shares. The former Australian accountant said options were essential to keep him motivated because his “passion and interest was in interplanetary space travel,” one person said.
Musk runs SpaceX, the world’s most valuable private company with a near monopoly on reusable rockets. Other ventures include social media platform X, brain implant startup Neuralink and AI group xAI. He has publicly threatened to develop future AI products outside of Tesla if his stake does not increase, saying he needs at least 25% to protect the company from activists or hostile takeover.
“Autonomy is important to Tesla’s future. . .[and]To cross that finish line, it’s essential that Elon is the leader, said Tasha Keeney, director of investment analysis and institutional strategy at Cathie Wood’s Ark Investment Management.
“We invest in breakthrough innovation, achieving something that seems unattainable means you have to be compensated to match that difficult goal,” she added.
While the final polling data will likely be released on Friday, there has been a major coup. Vanguard, Tesla’s largest shareholder with a 7.3% stake, changed its stance on pay and objected to it in 2018, according to a person familiar with the results. BlackRock, the second largest, also supports both resolutions. BlackRock declined to comment and Vanguard did not respond to a request for comment.
Other prominent shareholders, incl Nordea Asset Management and the California Public Employees Retirement System, have publicly opposed reauthorization.
The next phase in the pay saga is a hearing in Delaware early next month, when Judge Kathaleen McCormick will consider the ruling. Ask for $5.2 billion in fees made by winning attorneys. Following her ruling, Tesla can appeal the pay decision to the Delaware Supreme Court.
While Tesla may quickly file paperwork to reincorporate in Texas, it is not expected to affect pay decisions as local courts will still have to respect the Delaware ruling .
The remaining barriers did little to spoil the celebratory mood in Austin, where attendees lined up to sign a “Don’t mess with Tesla retail shareholders” flag.
Musk answered questions for more than an hour on topics ranging from his shoes to whether 6-year-olds should be allowed to tour Tesla’s giant factory. One shareholder was visibly shaken when asking his “idol” a question.
Musk also claimed to have had two “murderous maniacs” threaten his life in the past 12 months and talked about “out of the blue” calls from Donald Trump, who he said is a fan of the Cybertruck and with whom he was associated. advisory role if the former US president is re-elected in November.
Compliments also flooded online.
“Congratulations to Elon on receiving his promised salary and starting a new company in Texas,” the state’s Republican governor, Greg Abbott, posted on X. “Welcome to a state with no income tax individuals and businesses.”
Additional reporting by Patrick Temple-West and Sujeet Indap
