Under CEO Elon Musk, Tesla credited with revolutionizing the auto industry, to boot electricity revolution and reaping billions in profits in the process. Now, Musk is on the verge of a record salary worth around $50 billion, after the electric car company’s shareholders approved a deal. The compensation plan was previously blocked by a federal judge.
Preliminary results of the vote were announced Thursday afternoon during the annual shareholder meeting at Tesla’s newest car and battery factory in Austin, Texas.
The context is apt: Shareholders also approved a measure to move Tesla’s corporate registration out of Delaware and to Texas. The company’s board argues that Delaware’s court system — where a judge struck down Musk’s pay plan in January — is unfair to Tesla.
“Damn, I love you guys,” Musk exuberantly told shareholders from the stage of the meeting in Austin, after the pay package was approved.
This vote is one referendum on Musk’s leadership at Teslaas some shareholders argued that the CEO was become more clearly distracted with his other companies, incl SpaceXBoring Company tunneling project, social media site Xand artificial intelligence company xAI. The electric car company has also lost more than half its value since its peak, when it was worth about $1.24 trillion at the end of 2021. Car sales are slower, Increasing competition in the electric car marketand a shifting to robotics and autonomous vehicle technology has left some shareholders confused about Tesla’s future.
In a letter published before the vote, proxy consulting firm Glass Lewis speak there are concerns that the compensation package would give Musk too much power over Tesla by making him the company’s largest shareholder “by a large margin.”
But supporters of the package — who prevailed in Thursday’s vote — said the compensation was fair payment for Musk’s performance at Tesla. “If Tesla wants to keep Elon’s attention and motivate him to continue devoting his time, energy, ambition and vision to delivering equivalent results in the future, then we must comply with our agreement.” letter to shareholders before the vote.
Musk’s compensation package, tied to a series of ambitious financial goals, was first approved by more than 70% of Tesla shareholders in 2018. But a group of investors challenged the package in court Delaware and in January, a state chancellor judge dismissed it , ruling it should be undone. The bid was an “immeasurable sum of money,” she wrote, and was approved by a board of directors whose members were less than objective.
Musk will now have greater control over his electric car company. What he does with that power remains to be seen.
