Under the leadership of CEO Elon Musk, Tesla is credited with revolutionizing the automotive industry, fueling the electric revolution, and racking up billions in profits in the process. Now Musk is set to receive a record payday worth nearly $50 billion, after the electric car company’s shareholders approved a compensation plan that had previously been blocked by a federal judge.
The preliminary result of the vote was announced Thursday afternoon during an annual shareholder meeting at Tesla’s newest car and battery factory in Austin, Texas.
The setting was appropriate: Shareholders also approved a measure to move Tesla’s corporate registration from Delaware to Texas. The company’s board of directors argued that the Delaware court system, where a judge struck down Musk’s pay plan in January, has been unfair to Tesla.
“Damn, I love you guys,” an enthusiastic Musk told shareholders from the meeting stage in Austin, after approval of the pay package was announced.
This vote was a referendum on Musk’s leadership at Tesla, as some shareholders argued that the CEO has become more visibly distracted by his other companies, which include SpaceX, tunneling company The Boring Company, social media site the artificial intelligence firm xAI. . The electric car company has also lost more than half its value from its highest peaks, when it was worth about $1.24 trillion at the end of 2021. Slower auto sales, increased market competition of electric cars and a pivot toward robotics and autonomous vehicle technology have left some shareholders confused about Tesla’s future.
In a letter released before the vote, proxy advisory firm Glass Lewis saying He was concerned that the compensation package would give Musk too much power over Tesla by making him the company’s largest shareholder “by a healthy margin.”
But proponents 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 retain Elon’s attention and motivate him to continue devoting his time, energy, ambition and vision to achieving comparable results in the future, we must maintain our agreement,” board chairman Robyn Denholm wrote in a 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 percent of Tesla shareholders in 2018. But a group of investors challenged the package in a Delaware court and, In January, a state chancery judge threw it out. discard, must be disposed of. The package, he wrote, was an “unfathomable sum” and had been approved by a board of directors made up of less than impartial members.
Now, Musk will have even more control over his electric car company. It remains to be seen what he will do with that power.
This is a developing story. Please check for updates.