Elon Musk, CEO of Tesla, has gotten enough votes from shareholders to get his 2018 stock option pay package accepted. Shareholders also agreed with the company’s plan to re-incorporate Tesla in Texas, moving it away from Delaware, which is where Musk’s pay package was thrown out.
At Thursday’s annual meeting of shareholders, which took place at Tesla’s gigafactory in Texas, people cheered and stood up when general counsel Brandon Ehrhart announced the results of the vote. It wasn’t clear right away what the margin of win was.
Musk jumped around on stage Thursday and said, “I just want to start by saying: Hot damn, I love you guys.” “I believe we’re beginning a whole new work for Tesla, not just a new chapter.”
Even though there were votes in favor of Musk’s 2018 stock option award, that doesn’t mean he will get it. If he does get it, he could get up to $56 billion, which would be the biggest CEO pay deal ever. The judge in Delaware who changed her mind about it has not yet made her final decision.
After years of going to court, her post-trial view came out in January. Richard Tornetta, a Tesla shareholder, sued to get out of Musk’s pay deal in 2019. He said that Musk was only a part-time CEO making too much money without the board’s demands that he work on Tesla full-time.
Because of the case and the evidence shown in court, the judge, chancellor Kathaleen McCormick, threw out the pay package because she thought it was unfair. At the time, she said that shareholders weren’t fully informed because Musk had power over how the pay package was put together, which Tesla didn’t say clearly enough.
In the past few weeks, tons of posts on X have been made by Tesla and Elon Musk supporters in support of the CEO’s pay. Musk has responded to a lot of those posts, which has caused Tesla to file a lot of paperwork with the government to make sure its proxy statement is correct this time.
Still, owners are likely to sue Tesla and Musk for giving a CEO pay that is split between xAI, SpaceX, and Neuralink. In fact, Musk and Tesla have been sued twice this week. The first time was by shareholders who said Musk made billions by selling Tesla stock in 2021 and 2022 using insider information. The second time was by different shareholders who said Musk started a rival AI company called xAI and spent a lot of time and money on it.
Many people think that Musk’s pay package could be stopped by the courts, which is one reason why Tesla pushed to re-establish itself in Texas. The company clearly thinks that it will face fewer problems there.
This year, after McCormick of the Delaware Court of Chancery gave her ruling, Musk wrote on X, “Never incorporate your company in the state of Delaware.” Then he put up a poll asking if Tesla should change its place of incorporation to Texas. That’s how we got here.
It’s not a surprise that none of the five shareholder proposals that would have required Tesla to step up its ESG game were approved. These proposals included requiring annual reports on efforts to stop harassment and discrimination, the use of collective bargaining, and setting goals and reporting on how sustainability metrics will be included in the pay plans of senior executives. The board said that shareholders should vote against all of them, and Tesla shareholders usually do what the board says.
Also Read: Before Tesla’s Big Shareholder Vote, Let’s Read Again the Judge’s Words That Led to This Point
Two suggestions from stockholders did pass. The first one limits the terms of directors to one year, and the second one says that Tesla’s governing documents must include simple majority vote rules.
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