In a surprising turn of events, Tesla shareholders have re-approved a controversial pay package for CEO Elon Musk worth billions, despite it being thrown out by a Delaware judge earlier this year. The decision was made at the company’s annual meeting on Thursday afternoon, along with a vote to move Tesla’s incorporation state to Texas. Musk had already hinted at the outcome of the votes in a tweet overnight, announcing that both measures had enough support to pass.
Although exact vote results were not disclosed by Tesla, preliminary results indicated that Musk’s pay package and the relocation to Texas had both been approved. The compensation package, consisting of 303 million options to purchase Tesla shares at a reduced price, was initially valued at $51 billion before being voided by a Delaware judge nearly five months ago. Due to a decline in Tesla’s share price, the package was worth $48.3 billion as of Thursday’s market closing.
Tesla’s board had emphasized the importance of approving the pay package to keep Musk fully engaged in running the company. Shareholders had previously approved the original compensation package in 2018, but Chancellor Kathaleen McCormick ruled in January that the process used to award the package was flawed. She criticized the board for being too close to Musk and failing to demonstrate that the compensation plan was fair.
Despite some major shareholders voting against the deal, including the California State Teachers Retirement Fund and the Norwegian sovereign wealth fund, the pay package was ultimately endorsed by a significant number of supporters including Cathie Wood of Ark Invest and Ron Baron of Baron Capital. However, concerns have been raised about Musk’s controversial actions, such as his acquisition of Twitter and allegations of improper share sales.
The decision to re-approve Musk’s pay package has received a mix of reactions, with some expressing optimism about Tesla’s future under his leadership. The early market response was positive, with Tesla’s shares rising 3% in Thursday trading. However, the Delaware court could still have the final say on the matter, as Tesla attorneys have assured that the incorporation move to Texas is not an attempt to avoid Delaware jurisdiction.
