Tesla CEO Elon Musk received enough shareholder votes to approve a 2018 stock option compensation package. Shareholders also approved the company’s decision to reincorporate Tesla in Texas, moving it away from the state where Musk’s pay package was eliminated: Delaware.
Shareholders present at the company’s annual meeting on Thursday, held at Tesla’s giant factory in Texas, cheered and gave a standing ovation when general counsel Brandon Earhart announced the voting results. The margin of victory was not immediately clear.
“I just want to start off by saying, ‘Damn, I love you guys,'” Musk said as he jumped on stage Thursday. “I believe we are not only opening a new chapter for Tesla, we are starting a new book.”
Votes for Musk’s 2018 stock option award — which could mean he receives compensation of up to $56 billion, the largest CEO compensation package in history — does not guarantee he will get it. The judge in Delaware who decided to overturn it has yet to issue a final ruling.
Her post-trial opinion issued in January came after a years-long legal battle. Tesla shareholder Richard Tornetta sued in 2019 to overturn Musk’s pay deal, claiming at the time that Musk was a part-time CEO getting an unfair amount of money without the board requiring him to focus entirely on Tesla.
That lawsuit and evidence presented at trial led Judge Kathleen McCormick to invalidate the pay package, ruling it unfair. It said at the time that shareholders were not fully informed at the time of the vote because Tesla had not properly disclosed Musk’s control over the process of creating the pay package.
Tesla and Elon Musk supporters have in the past few weeks been relentlessly posting on X in favor of the CEO’s pay package. Musk has engaged in many of those posts, leading to a flurry of regulatory filings as Tesla works to cover its dealer databases this time around.
However, shareholders are still likely to sue Tesla and Musk for agreeing to a pay package for a CEO whose time is split between several other companies, including xAI, SpaceX and Neuralink. In fact, Tesla and Musk have been sued twice this week: once by shareholders who claimed… Musk has made billions Sold Tesla shares in 2021 and 2022 using insider information, again through separate shareholders, to start xAI, a competing artificial intelligence company, and transfer talent and resources to it.
Fear of the courts blocking Musk’s pay package is likely the reason Tesla is pushing to reincorporate in Texas, where the automaker clearly believes it will face less of a challenge in the courts.
After McCormick of the Delaware Circuit Court issued its opinion earlier this year, Musk posted on X: “Never incorporate your company in Delaware.” then Posted a survey We wondered if Tesla should change its state of incorporation to Texas, and now here we are.
Unsurprisingly, none of the five shareholder proposals that would require Tesla to step up its environmental, social, and governance (ESG) game passed — things like annual reporting on anti-harassment and discrimination efforts, adopting collective bargaining, and adopting goals and reporting to incorporate sustainability metrics into compensation plans. Senior executives. . The board recommended that shareholders vote against all of them, and Tesla shareholders typically approve anything the board recommends.
Two shareholder proposals have been passed. The first reduces a director’s term to one year, and the second requires simple majority voting provisions in Tesla’s governing documents.