Elon Musk, the billionaire CEO of Tesla and owner of the social media platform X, has successfully secured shareholder approval for his substantial compensation package.
Tesla shareholders reiterated their support for Musk’s $56 billion pay deal and have given the green light for the company’s relocation to Texas, reflecting strong confidence in Musk amid his ongoing legal battles.
During Tesla’s annual shareholder meeting in Austin, Texas, Musk expressed his gratitude, saying, “Hot damn I love you guys,” after the votes were counted.
The pay plan, now valued at approximately $48 billion, had originally received 73% support six years ago but later annulled by a Delaware judge. The company did not immediately release the percentage of shareholders who voted for or against the compensation package.
Musk had earlier in the day indicated that both proposals were “passing by wide margins.”
To provide perspective, Musk’s compensation package is nearly as large as the entire market value of the Nigerian Stock Exchange, which is N56.4 trillion (approximately $38.9 billion).
It also exceeds Nigeria’s external reserve by 69.9% (approx. 70%), which is around $33 billion, highlighting the immense scale of Musk’s compensation in a global financial context.
Broad support from Tesla Board
Tesla’s board, led by Chair Robyn Denholm, has strongly supported Musk’s compensation.
Denholm wrote an open letter to shareholders emphasizing the importance of retaining and motivating Musk, highlighting his critical role in Tesla’s growth.
- This reflects the board’s belief in Musk’s unique impact on the company’s success. However, Musk’s divided focus between Tesla and his other ventures, including SpaceX and X.com (formerly Twitter), remains a contentious issue.
- Despite the controversies, Musk’s personal efforts to secure shareholder support appear to have been effective as most longtime Tesla supporters argue that Musk’s leadership is indispensable.
- Major institutional investors like BlackRock and Vanguard reportedly voted in favor of the compensation package.
But smaller shareholder groups and significant investors like Norway’s $1.7 trillion sovereign wealth fund and the California State Teachers’ Retirement System opposed the package, citing concerns over its size and structure
Legal battles remain
The outcome of the shareholder vote might not resolve all corporate governance issues at Tesla.
- Dissatisfied shareholders could challenge the vote’s legality in Delaware, the same court that previously voided Musk’s 2018 compensation plan.
- A lawsuit was filed last week, accusing Musk of using “strong-arm, coercive tactics” to secure votes for the compensation and relocation proposals.
- Legal experts also suggest that the latest approval process may still face scrutiny.
- Complicating matters further, the Employees’ Retirement System of Rhode Island has accused Musk and his brother Kimbal of insider trading related to the sale of Tesla stock to fund Musk’s purchase of Twitter.
- Additionally, allegations of inappropriate relationships and a hostile work environment at SpaceX have surfaced, adding to Musk’s legal and public relations challenges