Tesla CEO Elon Musk’s enormous $56 billion compensation package, currently valued at $45 billion, and the company’s relocation of its corporate headquarters from Delaware to Texas have received overwhelming support from the company’s shareholders. The wage agreement was rejected earlier this year by a Delaware judge, which led to the announcement of this judgment during the company’s annual meeting. In a victorious address delivered in Austin, Texas, Musk announced, “We’re not just opening up a new chapter—we’re starting a new book,” in celebration of the approvals.
Delaware Chancellor Kathaleen St. Jude McCormick invalidated the restored compensation package, which was initially valued at $56 billion in 2018. When the shareholders approved the all-stock remuneration, she decided that Tesla had misled them. The value of the package dropped to about $44.9 billion due to a stock decrease, although Musk’s compensation was unanimously supported by shareholders. This action is considered essential to Musk’s continued employment at Tesla, where he has led the company’s transition from electric vehicles to autonomous vehicles and AI and robotics.
Tesla’s stock rose nearly 3% to $182.47 following the announcement, though it remains down about 25% this year. Musk has hinted that he might develop AI outside Tesla if he doesn’t secure a 25% stake in the company, up from his current 13%. His xAI venture recently secured $6 billion in funding for AI development.
The decision to relocate Tesla’s legal home to Texas aims to escape Delaware court oversight and Chancellor McCormick’s scrutiny. This move follows her January ruling that Musk, who exerts significant control over Tesla’s board, was not entitled to the hefty pay package. Despite opposition from some institutional investors and advisory firms ISS and Glass Lewis, Tesla’s lobbying efforts paid off. Chairwoman Robyn Denholm defended the package, highlighting its role in generating substantial shareholder value.
While some shareholders like California’s State Teachers Retirement System opposed the pay package due to its size and potential dilution, Tesla argued that it incentivized Musk to create over $735 billion in shareholder value. The approval signals strong support for Musk’s leadership as Tesla appeals McCormick’s ruling to the Delaware Supreme Court.
