Tesla investors are voting in favor of a historic payout for CEO Elon Musk and a proposal to move the company’s legal headquarters to Texas, according to Musk. The multi-billionaire announced that shareholder votes on these issues are passing by wide margins. The final results are expected to be confirmed at a meeting on Thursday.
One significant proposal under consideration is a pay deal for Musk, initially valued at $56 billion (£43.8 billion) when agreed upon in 2018. Despite Tesla’s lack of immediate comment, Musk expressed gratitude to his supporters via a post on X, formerly known as Twitter.
Tesla shares surged over 6% in early trading, a sign of investor confidence that the deal will pass and alleviate concerns about Musk potentially departing the company. Dan Ives, an analyst at Wedbush Securities, noted that the proposal’s failure could have led to various negative scenarios, including Musk’s possible exit as CEO.
However, the situation is complicated by legal challenges. Earlier this year, a Delaware judge voided the compensation package after a small investor sued, deeming the amount “unfair” and criticizing the process for its “deeply flawed” nature due to a board heavily influenced by Musk. Despite this setback, Tesla described the court’s decision as “fundamentally unfair” and not reflective of stockholder intentions.
In response, Tesla resubmitted the deal for another shareholder vote, also proposing to reincorporate outside Delaware. The board maintains that Musk’s leadership, under which Tesla achieved ambitious goals, justifies the package and is crucial to retaining his dedication to the company.
Tesla executives have also voiced support for Musk’s pay package on social media, emphasizing his importance to the company’s success. As an added incentive, Musk has promised a personal tour of Tesla’s Texas factory to some voting shareholders.
Previously, the compensation package garnered support from 73% of shareholders in 2018, highlighting Musk’s significant influence and the company’s faith in his leadership.
