Tesla shareholders are set to vote on Thursday regarding the restoration of Elon Musk's $44.9 billion pay package. If the shareholders reject the compensation package, Musk has threatened to take his artificial intelligence research to another company or even consider walking away. On the other hand, if the all-stock compensation package is approved, it would likely ensure Musk's continued presence at Tesla, focusing on AI and robotics, including autonomous vehicles.
Despite a previous rejection of the package by a Delaware judge in January, analysts believe that the reapproval at the upcoming shareholders' meeting is probable. The uncertainty surrounding Musk's future at Tesla stems from his demands for a 25% stake in the company, which he has voiced on his social media platform, X. Musk's xAI project recently secured $6 billion in funding for AI development.
Wedbush Analyst Dan Ives anticipates overwhelming approval of the package, which could alleviate concerns and boost Tesla's stock performance. The company has experienced a more than 30% decline in shares this year, with warnings of lower sales growth. Another significant issue on the shareholder ballot is the potential relocation of Tesla's legal headquarters from Delaware to Texas, aiming to evade the Delaware court's oversight.
While some institutional investors have opposed Musk's substantial payout, individual shareholders, who own more than half of Tesla's shares, are likely to support the package. Notably, Norway's sovereign wealth fund has announced its intention to vote against the package, citing concerns about its size, structure, dilution, and key person risk.
Despite recommendations from shareholder advisory firms ISS and Glass Lewis to vote against the package, Tesla and Musk have been actively lobbying for its approval through various channels. Tesla Chairwoman Robyn Denholm emphasized the value generated under Musk's leadership and the unfairness of him not being compensated for his contributions over the past six years.
The 2018 award, which incentivized Musk to create substantial value for Tesla shareholders, remains a contentious issue as the company and its stakeholders await the outcome of the crucial vote.
