Tesla CEO Elon Musk secured enough shareholder votes to approve his stock option compensation package for 2018. Shareholders also approved the company’s decision to relocate from Delaware, where Musk’s compensation package was rejected, and reincorporate Tesla in Texas.
Shareholders at the company’s annual meeting on Thursday at Tesla’s Gigafactory in Texas cheered and gave a standing ovation as General Counsel Brandon Earhart announced the results of the vote. The margin of victory was not immediately clear.
“First of all, I want to say, ‘Wow, I love you guys,'” Musk said Thursday, bouncing around on stage. “I think not only is a new chapter opening for Tesla, but a new book is beginning to be written.”
Musk’s 2018 stock option grant was overwhelmingly voted in favor of, which could mean he could receive up to $56 billion in compensation, the largest CEO compensation package in history, though there’s no guarantee he’ll get it. The Delaware judge who decided to revoke the grant still needs to issue a final ruling.
Her post-trial opinion, issued in January, came after a years-long legal battle. Tesla shareholder Richard Tornetta sued in 2019 to set aside Musk’s compensation contract, alleging that Musk was getting an unfair amount of compensation even though he was a part-time CEO at the time and the board had not required him to focus full-time on Tesla.
The lawsuit and evidence presented at trial led Chancellor Judge Katherine McCormick to rule that the compensation package was unfair and invalid. She said at the time that Tesla had not adequately disclosed Musk’s control over the process of creating the compensation package, which meant shareholders were not fully informed when they voted.
Tesla and Elon Musk supporters have been relentless in posting to X in recent weeks in support of the CEO’s compensation package. Musk has responded to many of these posts, and the regulatory filings have come as Tesla tries to hide the rationale behind its latest proxy statement.
Still, shareholders are likely to sue Tesla and Musk for approving a compensation package for a CEO who splits his time between multiple companies, including xAI, SpaceX, and Neuralink. In fact, Tesla and Musk have been sued twice this week, once in a lawsuit filed by a company that has filed suit against the company. Musk has made billions of dollars In 2021 and 2022, he used insider information to sell Tesla shares, and another shareholder started a competing AI company, xAI, to which he diverted his talent and resources.
Tesla may have pushed to reincorporate in Texas out of fear that Musk’s compensation package would be blocked in court, where the automaker apparently believes it would face fewer court challenges.
After Delaware Chancery Court’s McCormick issued his opinion earlier this year, Musk posted on X that “no company should be incorporated in Delaware.” Survey posted Tesla asked if they should change their headquarters location to Texas, and here we are.
Not surprisingly, none of the five shareholder proposals calling for Tesla to strengthen its ESG practices passed. These included requiring annual reporting on anti-harassment and discrimination efforts, implementing collective bargaining, and introducing targets and reporting for incorporating sustainability metrics into senior executive compensation plans. The board recommended shareholders vote against all of these, but Tesla shareholders typically follow the board’s recommendations.
Two shareholder proposals passed: the first would have shortened director terms to one year, and the second would have sought simple majority voting provisions in Tesla’s governing documents.
This story is still developing, please check back for updates.
Source link
