Tesla shareholders are giving Elon Musk the green light on his $56 billion pay package, according to a social media post by Musk himself. This comes after a Delaware judge struck down the original plan.
The compensation package, with a potential value of up to $56 billion, awards Musk stock options linked to Tesla achieving specific performance benchmarks. Despite prior criticism and opposition from prominent proxy advisors, shareholder approval signals a strong endorsement of Musk's leadership.
The final results are slated to be announced only at a Tesla shareholder meeting held in Austin later today. In the meantime, the Tesla CEO has expressed confidence based on early voting trends. Musk believes these trends suggest he has secured the necessary votes to reinstate the pay package.
Supportive comments flooded Musk's X post, with many users expressing their continued backing. "We will go through hell and high water and still support you my friend," one commenter wrote.
"Well deserved, Captain! Keep pushing forward and use the haters' scorn as fuel to achieve even more. Thank you for all you do @elonmusk," one user said, while another wrote, "This is the literal best news."
Shareholders Approve Musk's Pay Package
Ron Baron, chair of Baron Capital, declared Musk's unwavering determination and commitment to excellence are the backbone of Tesla. He urged shareholders to endorse Musk's compensation again, stating emphatically, "Tesla is Elon."
Robyn Denholm, Tesla's board chair, pointed to the substantial returns investors have witnessed since March 2018. The top executive highlighted shareholder returns had surpassed 1,000 percent under Musk's leadership. He also emphasized Tesla's commitment to fulfilling its obligations to Musk.
Proponents, including Comcast CEO Linda Yaccarino, cheered the early voting indications. Musk, one of the world's wealthiest individuals, took to X to reiterate his commitment to Tesla, vowing to make it the most valuable company in the world.
As UCLA School of Law professor James Park observes, this vote exemplifies the power shareholders can wield. "Sometimes they are just rubber-stamping what the board has proposed, but this is corporate democracy in action," he said, according to a report by The Washington Post.
A Delaware judge earlier in 2024 challenged the approval process for Elon Musk's compensation package. In response, Musk expressed his frustration and indicated he might pursue advanced technology development elsewhere. This potential shift in focus caused anxiety for Tesla, which is already facing challenges.
Investor Silence and Upcoming Shareholder Meeting
While some investors remained silent on their voting position, Tesla's largest shareholders, including Vanguard Group, BlackRock, and State Street, collectively holding roughly 17% of Tesla's stock, abstained from public comment. The full voting breakdown will be revealed during a Tesla shareholder meeting in Austin.
However, some investors remain opposed. Norges Bank Investment Management, managing Norway's sovereign wealth fund, voted against the pay package due to its size. Similarly, the California Public Employees' Retirement System (CalPERS), the largest U.S. pension fund, also opposed the deal, citing concerns over its magnitude.
While acknowledging Musk's key role in Tesla's development, certain stakeholders have expressed concern over the company's recent financial performance. Tesla has seen declining sales and profits, and its market share has shrunk due to intensifying competition.
Furthermore, some shareholders believe Musk's acquisition of another company (details withheld) has detracted his focus from Tesla at a critical juncture.
