Tesla shareholders approved CEO Elon Musk’s $56 billion package, showing strong support for his leadership and incentivizing him to stay focused on Tesla. Despite some opposition from big investors and advisory firms, the proposal passed, highlighting Musk’s popularity among Tesla’s smaller investors.
At the annual shareholder meeting in Austin, Texas, Musk called himself “pathologically optimistic” and said that Tesla and its factory wouldn’t exist without his optimism. He emphasized that he always delivers in the end, which he said is what really matters.
Tesla Shareholders Approved Musk’s Package, But Legal Issues Continue
Tesla shareholders voted to approve Elon Musk’s $56 billion pay package, showing strong support for his leadership. However, this decision doesn’t settle ongoing legal battles.
A Delaware court is still reviewing a lawsuit about the pay package, which could take months to resolve. In January, the judge called the pay package “unfathomable” and invalidated it. Musk might also face new lawsuits over the pay, which is the largest in U.S. corporate history. Shareholders had originally voted for this package in 2018.
“This isn’t over,” said Brian Quinn, a professor at Boston College Law School. The judge will closely examine the vote to ensure Musk didn’t influence it. The judge criticized Tesla’s board for being too close to Musk, saying the plan was proposed by a board with personal and financial ties to him. Tesla shareholders voted to move the company’s legal home from Delaware to Texas. They also re-elected two board members: Kimbal Musk, Elon Musk’s brother, and James Murdoch, son of media mogul Rupert Murdoch.
Shareholders increased investor control by passing proposals to shorten board terms to one year and to lower voting requirements for proposals to a simple majority, despite the board’s opposition to these changes.
Tesla Shareholders Approve Changes and Receive Company Updates
Tesla did not reveal the voting results, which are expected soon. Over half a million people watched the meeting online.
“This shows that Tesla’s retail shareholders support what’s happening. It will be interesting to see the exact vote percentages,” said Lindsey Stewart from Morningstar Sustainalytics. Shareholder approval of Musk’s pay package indicates strong support for his leadership and a desire to avoid risking the company’s future.
“Investors are accepting the risks of relying heavily on Musk,” said Jason Schloetzer, a business professor at Georgetown University.
In January, Musk threatened to develop AI and robotics outside of Tesla if he didn’t gain enough control. He shifted the company’s focus to robotaxis instead of cheaper mass-market electric cars, worrying some investors about the challenges of perfecting autonomous technology. Musk provided an update on Tesla’s performance, announcing that the company recently shipped a record 1,300 Cybertrucks in one week and plans to ramp up production of its Semi trucks. He also discussed plans for autonomous cars but did not give a launch date for self-driving vehicles.
Shareholders Support Musk’s Pay Amid Stock Fluctuations
Tesla’s share price has dropped about 55% from its 2021 peak due to slower EV sales and Musk’s divided attention between his companies. Despite this, the stock rose 2.9% on Thursday. “Shareholders reaffirmed Musk’s contract, showing he deserves rewards for meeting tough goals,” said Garrett Nelson from CFRA Research. He noted that while this news removes some uncertainty, a “sell the news” reaction on Friday is possible after recent gains.
The board defended Musk’s pay package, stating he met all targets for market value, revenue, and profitability. However, some large investors, like the California Public Employees’ Retirement System, called the pay “excessive.” Ivan Frishberg from Amalgamated Bank highlighted the pressure on shareholders to keep Musk but emphasized that good governance is crucial for a company’s success. He criticized Tesla’s board for lacking in this area.
Concerns Over Musk’s Focus as He Juggles Multiple Companies
Musk is the driving force behind Tesla and is credited with much of its success, but the company’s sales and profits have slowed. There are concerns that he is spreading himself too thin.
Since the pay package was approved in 2018, Musk has taken on two more companies. He now runs or owns six firms, including SpaceX, social media giant X (formerly Twitter), and the artificial intelligence firm xAI, which he started in 2023.
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