Tesla Shareholders Reaffirm $45 Billion Pay Award for Elon Musk

Musk's Lucrative Compensation Plan Gets Green Light

shareholders have reaffirmed a massive $45 billion pay package for CEO , overturning a court decision that blocked the award. The vote, which took place at Tesla's annual meeting in Austin, , signals strong shareholder confidence in Musk's leadership despite ongoing controversies and legal battles, reported the NY Times.

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The Court Battle

In January, Chancellor Kathaleen St. J. McCormick of the Court of Chancery in agreed with shareholders who argued that the 2018 pay package was excessive. However, Tesla's board called for a new vote, hoping that fresh shareholder approval might influence the court's decision. Despite this effort, legal experts remain skeptical. “It doesn't change a thing,” said Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware.

Shareholder Perspectives

Supporters of Musk, including board chair Robyn Denholm, emphasize the value he has brought to Tesla.

“Elon is not only a visionary, but a C.E.O. with a proven ability to execute our mission and achieve incredibly ambitious business results that have generated extraordinary value for you,” Denholm stated in a letter to shareholders.

However, the vote also highlighted divisions among investors. Several large institutional investors, including Norges Bank Investment Management and Public Employees' Retirement System (CalPERS), opposed the pay package, citing concerns over Musk's polarizing behavior and recent declines in Tesla's sales and profit.

Financial Implications

The compensation plan is tied to demanding performance targets, including revenue and profit benchmarks, and a sustained increase in Tesla's stock value to $650 billion. These targets, once deemed ambitious, have been met, allowing Musk to collect the stock options.

Tesla shares have dropped over 25% this year, though they rose on the day of the vote. At its peak in 2021, Tesla's market value was $1.2 trillion, but it has since fallen to around $580 billion.

Broader Impact

Shareholders also approved relocating Tesla's corporate registration to Texas, a move motivated by perceived unfair treatment from Delaware courts. Additionally, a proposal to prevent Tesla from interfering with workers' unionization efforts was rejected, reflecting Musk's ongoing opposition to organized labor.

EVXL's Take

The shareholder vote underscores the strong belief in Musk's vision and leadership despite significant challenges. This decision not only impacts Musk's status as one of the world's richest individuals but also reflects broader tensions about executive compensation and corporate governance. As Tesla continues to navigate legal hurdles and market fluctuations, the outcome of this vote will likely influence the company's future direction and investor relations.

For more insights on Tesla's evolving strategies and market performance, check out our recent articles on EVXL.

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Haye Kesteloo
Haye Kesteloo

Haye Kesteloo is the Editor in Chief and Founder of EVXL.co, where he covers all electric vehicle-related news, covering brands such as Tesla, Ford, GM, BMW, Nissan and others. He fulfills a similar role at the drone news site DroneXL.co. Haye can be reached at haye @ evxl.co or @hayekesteloo.

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