Tesla CEO Elon Musk said that the shareholders are voting in favour of his disputed $56 billion pay package and to relocate the electric vehicle manufacturer’s legal home to Texas, in a social media post on Wednesday, adding that passage was by wide margins.
“Both Tesla shareholder resolutions are currently passing by wide margins. Thanks for your support,” said Musk on X. A vote in favour strengthens the electric carmaker’s position in a Delaware court, where a judge voided the 2018 compensation package, the largest in US corporate history at that time, citing the board was “beholden” to Musk, reported news agency Reuters.
This outcome represents a victory for Musk and the board, who have risked their credibility to secure shareholder approval, despite opposition from major investors such as Glass Lewis and Institutional Shareholder Services (ISS).
The results will be announced at a meeting at Tesla’s Texas headquarters on Thursday.
A source aware of the preliminary vote count told Reuters that the ‘yes’ result was achieved with the support of both major institutional investors and retail investors.
However, shareholders have the option to change their votes until the start of the annual meeting.
Tesla shareholders also voted on other proposals, including relocating the company’s legal headquarters from Delaware to Texas, and the re-election of two board members: Kimbal Musk, Elon Musk’s brother, and James Murdoch.
Some investors saw the vote on Musk’s compensation as a measure of their trust in his leadership. While Musk has been the driving force behind Tesla and is credited with much of its success, the company has recently experienced a slowdown in sales and profits.
The board said that Musk, the world’s richest person, deserved the pay package because he achieved all the ambitious targets related to market value, revenue, and profitability.
They further said that the package is necessary to keep Musk focused on Tesla, even though a Delaware judge pointed out that the 2018 pay plan did not ensure Musk would dedicate a huge amount of time to the company.
Musk has indicated that he might develop AI and robotics products outside of Tesla if he doesn’t secure enough voting control, which hinges on the approval of the 2018 pay package.
Some large shareholders, including Norway’s sovereign wealth fund and California’s two largest pension funds, have declared their opposition to the compensation, calling it excessive.
Tesla has been actively seeking support for Musk’s pay package, especially from retail investors, who form a important part of its ownership base but often do not vote.
Company executives have posted messages on social media, highlighting Musk’s importance to Tesla’s success. Tesla has also run social media advertisements, and Musk has promised a personal tour of Tesla’s Texas factory to some shareholders who vote.
Previously, a Delaware judge rejected the same package, describing it as an “unfathomable sum” granted by a board with close personal and financial ties to Musk.
The board organised the shareholder vote to strengthen its appeal against the ruling, which criticised the board for not fully informing shareholders before approving the 2018 pay package.
Musk may have to wait months or years for his pay package to be restored as the appeals process moves through Delaware’s Supreme Court.
Tesla could also face additional litigation from some shareholders. Recently, one shareholder filed a lawsuit challenging the upcoming vote on Musk’s pay package and the change of domicile.