At Tesla’s annual shareholder meeting, investors voted to restore CEO Elon Musk’s controversial $44.9 billion pay package that was previously rejected by a court in Delaware earlier this year. Despite opposition from some large institutional investors and proxy firms, the proposal passed, indicating strong support for Musk among the company’s retail investor base. While this vote does not mean Musk will receive the pay reward soon, it does show that Tesla shareholders have confidence in him. Musk took to social media platform X, which he also owns, to express his confidence that the pay plan would be approved, leading to an increase in Tesla’s stock price.
Musk’s pay package will likely be tied up in the Delaware Chancery Court and Supreme Court for months as Tesla attempts to overturn the previous court ruling. First approved by Tesla’s board and stockholders in 2018, the stock award was initially valued at $56 billion in Tesla stock. However, due to the decline in Tesla stock value, it is now valued at $44.9 billion. Tesla’s stock has been down for the year, partly due to increased competition in China. The January court ruling criticized the pay package as “unfathomable,” stating that Musk essentially controlled the Tesla board during the approval process in 2018 and failed to fully inform shareholders of the details.
At the shareholder meeting, Musk reassured investors that he is committed to the company and cannot sell any stock in the compensation package for five years. He emphasized that the package is not in cash and stated, “I can’t cut and run, nor would I want to.” Shareholders have previously raised concerns about Musk’s numerous side projects, but his dedication to Tesla seems unwavering. Despite the ongoing legal battle surrounding his pay package, the favorable vote indicates continued support for Musk as CEO of Tesla.
Some investors and proxy firms may still have reservations about the size and structure of Musk’s pay package, but Tesla shareholders have shown overwhelming support for its restoration. The company’s retail investor base, in particular, seems to have confidence in Musk’s leadership and vision for Tesla’s future. The outcome of the shareholder vote sends a strong signal that shareholders are willing to back Musk despite legal challenges and criticism surrounding his compensation. Musk’s reassurances about his commitment to Tesla and inability to sell stock in the pay package for five years have helped alleviate some concerns among investors.
As Tesla continues to face competition in the electric vehicle market and legal battles over Musk’s pay package, the CEO’s leadership and ability to navigate these challenges will be crucial. The restoration of his record pay package reflects the trust and support Musk still enjoys within the company, despite setbacks earlier in the year. As the legal proceedings in Delaware continue, Tesla shareholders will be closely watching the outcome and its impact on the company’s future. In the meantime, Musk’s focus on Tesla’s growth and innovation will be essential in maintaining investor confidence and driving the company forward in a competitive market.
