Elon Musk Claims Tesla Shareholders Support $56 Billion Pay Deal Ahead of AGM Vote

Elon Musk has asserted that Tesla shareholders are voting by a substantial margin to approve his $56 billion (£44 billion) compensation package, ahead of the electric carmaker’s critical annual general meeting on Thursday. This package is the largest ever awarded to a CEO in U.S. corporate history and faces an investor ballot after a U.S. judge nullified it earlier this year.

Shareholders will also decide on Musk’s proposal to relocate Tesla’s legal base to Texas. The vote results will be announced at Tesla’s headquarters in Texas at 4:30 PM ET (9:30 PM UK time).

Investor and Advisory Opposition

Despite Musk’s claim of strong shareholder support, several significant investors, including Norway’s sovereign wealth fund and the California State Teachers’ Retirement System, have expressed their intention to reject the pay package. Proxy advisory firms Glass Lewis and Institutional Shareholder Services have also recommended that shareholders oppose the award.

Legal and Procedural Challenges

File Image (UK Government, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons)

Even if shareholders approve the compensation package, Musk may still face further legal challenges. Legal experts indicate that the Delaware court, which initially blocked the pay deal, might not accept the new, non-legally binding vote to reinstate the package. The pay award, initially agreed upon by Tesla’s board in 2018, was contested by a Tesla shareholder through a lawsuit.

In January, Delaware Judge Kathaleen McCormick ruled that the Tesla board had improperly set the “historically unprecedented compensation plan” and questioned its necessity for retaining Musk at Tesla. “Swept up by the rhetoric of ‘all upside’, or perhaps starry-eyed by Musk’s superstar appeal, the board never asked the $55.8bn question: was the plan even necessary for Tesla to retain Musk and achieve its goals?” McCormick wrote in her decision.

The outcome of this vote and the ensuing legal proceedings will significantly impact the future governance and operational strategies of Tesla, as well as Musk’s role within the company.


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