In a move that has garnered significant attention, Tesla’s shareholders have overwhelmingly voted in favor of a record-breaking compensation package for the company’s CEO, Elon Musk. The proposed deal, worth a staggering $56 billion (£43.8 billion) when it was first agreed upon in 2018, has been a subject of intense scrutiny and debate.
According to Musk’s recent post on the social platform X, formerly known as Twitter, the shareholder votes on the compensation package and the plan to relocate Tesla’s legal headquarters to Texas is “currently passing by wide margins.” This development has significantly boosted the company’s shares, which opened more than 6% higher, indicating investor confidence in the deal’s approval.
The voting process was closely watched, with analysts like Dan Ives of Wedbush Securities noting that the successful passage of the proposal would be a relief, as it would prevent the scenario of Musk potentially leaving the company. Ives stated,
“In a nutshell, if this proposal went south, a lot of bad things and scenarios could have happened including Musk beginning a path to not being CEO of Tesla.”
However, the road to this shareholder approval has been without challenges. Earlier this year, a Delaware judge had previously voided the compensation deal, citing it as “unfair” and the process for determining the package as “deeply flawed,” given the board’s domination by Musk himself.
Tesla has since submitted the deal to another vote, asking its shareholders to back a plan to reincorporate the company outside Delaware.
The board has defended the package, stating that Musk deserves it due to Tesla’s achievement of its ambitious targets under his leadership and that it is necessary to ensure his continued dedication to the company.
The package, estimated to be worth around 300 times what the top-earning boss in the US made last year, has garnered both support and criticism. Musk even promised a personal tour of Tesla’s factory in Texas to some shareholders who voted.
As the company awaits the official announcement of the shareholder vote results at a meeting on Thursday, the outcome will have significant implications for Musk’s future at Tesla and the company’s overall direction.
