Elon Musk Wins Shareholder Vote On Pay, Texas Incorporation

Tom Jowitt,
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Image credit: Elon Musk

Shareholders at Tesla vote to reinstate Elon Musk’s ‘ridiculous’ $56bn pay package, and approve incorporation in Texas

Tesla shareholders on Thursday voted to ratify the huge pay package of Elon Musk, which had been worth as much as $56 billion.

Tesla shareholders had approved the pay package back in 2018, but in January 2024 a Delaware chancery judge struck it down citing Musk’s “extensive ties” with board members, as well as other concerns with the approval process.

Multiple institutional Tesla shareholders had objected to Musk’s huge financial compensation package – at a time when the EV maker had opted to axe thousands of staff, and is facing falling sales and eroding profit margins, as slowing demand for EVs around the world.

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Image credit: Unsplash

Pay package

Earlier this week Chris Ailman, chief of one of the largest pension funds in the US (the California State Teachers’ Retirement System or CalSTRS), said he would vote against Elon Musk’s “ridiculous” pay deal.

Norway’s sovereign wealth fund (Tesla’s eighth-largest shareholder) also came out in opposition to the pay deal, as did a proxy advisory firm, which advised Tesla investors to vote against re-approval of Musk’s record-breaking pay package, citing the package’s “excessive size” and Musk’s “slate of extraordinarily time-consuming projects”.

Last week Tesla’s chair Robyn Denholm had warned that Elon Musk could focus his attention elsewhere from Tesla if not granted the pay package.

Denholm also claimed the approval was “obviously not about the money.”

In an April regulatory filing Tesla had valued Elon Musk’s package at $44.9 billion, but it was once worth as $56 billion. The compensation package decline in value reflects Tesla’s stock price fall, which has declined about 25 percent so far this year.

Shareholder vote

It seemed clear on Thursday that Elon Musk was going to win the shareholder vote, despite the opposition from multiple institutional investors, after Tesla had disclosed that shareholders were voting to approve Musk’s pay package by a wide margin.

That drove the company’s shares up 3 percent by the time the markets closed on Thursday.

By Friday it was confirmed that Tesla shareholders however have voted to restore CEO Elon Musk’s pay package, although the Associated Press noted that that the vote doesn’t necessarily mean that Musk will get the all-stock compensation anytime soon.

This is because the package is likely to remain tied up in the Delaware Chancery Court and Supreme Court for months as Tesla tries to overturn the Delaware judge’s rejection.

The AP also reported that the approval was likely swung by individual shareholders.

After Delaware Judge Kathaleen McCormick had annulled Elon Musk’s $56 billion pay package, Musk moved to re-incorporate both Tesla and SpaceX in Texas.

Tesla shareholders on Thursday also voted to approve that move, and Musk tweeted this as a parting shot at Delaware.

Elon Musk was reportedly delighted at the shareholder approval of his pay package.

“Its incredible,” Musk was quoted by the AP as telling the crowd gathered at Tesla’s headquarters and factory in Austin, Texas. “I think we’re not just opening a new chapter for Tesla, we’re starting a new book.”