Elon Musk wins Tesla shareholders’ vote on pay package, Texas relocation

Key Points:

• Shareholders re-approved a pay package for Musk potentially worth $48 billion, down from the initial $56 billion due to recent stock performance.
• The vote aims to overturn a Delaware court decision that voided the original package due to concerns about its value and board independence.
• Tesla will reincorporate in Texas, seen as a move to give Musk more control and potentially benefit from the state’s business-friendly tax environment.
• Musk’s grip on the company is expected to tighten, with his stake increasing from 13 per cent to over 20 per cent.
• Institutional investors, previously against the pay package due to its size, were successfully lobbied by Musk.
• Tesla chair Robyn Denholm played a key role in the shareholder campaign, emphasising that Musk had achieved ambitious goals set in the original pay deal.
• Major shareholders Vanguard and BlackRock flipped their stances on the pay package, supporting both resolutions.

 

In a major victory for CEO Elon Musk, Tesla shareholders overwhelmingly approved both his record-breaking pay deal and the company’s relocation to Texas.

The results, announced at Tesla’s annual meeting in Austin, solidify Musk’s control over the company and set the stage for its future trajectory.

Shareholders Back Musk’s Pay Package, Though Reduced in Value

The approved pay package could be worth up to $48 billion for Musk, slightly less than the initial $56 billion proposed due to a recent decline in Tesla’s stock price.

This vote aims to overturn a Delaware court decision that struck down the original package, citing concerns about its value and the board’s independence.

The shareholder approval strengthens Tesla’s position as they seek to convince the court to reverse its decision, according to the Financial Times.

Texas Bound: A Strategic Move for Tesla

Tesla’s move to Texas is seen as a strategic shift by Musk. Texas offers a more business-friendly environment with lower taxes, potentially benefiting the company’s bottom line. Additionally, this move aligns with Musk’s recent relocation to the state.

With the vote’s outcome, Musk’s stake in the company is expected to rise from 13 per cent to over 20 per cent, further solidifying his control over Tesla’s future direction.

Rallying the Shareholders

The shareholder vote capped a months-long campaign by Musk and the board. They focused on rallying support, particularly from Tesla’s significant number of retail investors. They also successfully lobbied institutional investors who had previously opposed the pay package’s size.

Also read: Tesla: Norway’s Oil Fund to Deny Elon Musk $56bn Pay Package

Notably, two of Musk’s key allies on the board, James Murdoch and Kimbal Musk, were re-elected despite objections from proxy advisors.

Victory Despite Market Downturn

This victory comes despite a recent decrease in Tesla’s stock value. However, Tesla chair Robyn Denholm played a crucial role in the campaign.

She stressed that Musk had achieved ambitious goals set in the original pay deal, justifying the substantial compensation.

Musk Prioritises Control and Dedication

Musk himself claims his increased stake is necessary to protect Tesla from potential hostile takeovers and ensure his continued dedication to the company.

Also read: Elon MusK Furious as Tesla is Booted From ESG Index”

Significantly, major shareholders Vanguard and BlackRock reversed their previous stance and supported both resolutions, potentially swayed by Musk’s arguments and the company’s performance.

Legal Hurdles Remain

The legality of the pay package remains in question. A Delaware court hearing in July will address the issue, with a potential appeal to follow.

While the Texas move won’t affect the court decision, it signifies a major shift for the company, with potential implications for future legal battles.

Texas Welcomes Tesla

The celebratory atmosphere in Austin saw Musk engage with enthusiastic shareholders, answering questions and signing autographs. Texas Governor Greg Abbott also welcomed Tesla, highlighting the state’s tax benefits.

Overall, this vote marks a significant win for Elon Musk, solidifying his control over Tesla and potentially shaping the company’s future in Texas.

The coming months will be crucial as the Delaware court weighs in on the pay package, and Tesla adjusts to its new home state.

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