Tesla shareholders voted to both re-approve a pay package for CEO Elon Musk that was once valued at $56 billion and reinstate the electric vehicle maker in Texas, giving him major victories as he seeks to reassert control over the company. .
The pay package, the largest in U.S. history, was supported by 77 percent of votes cast at Tesla’s annual meeting in Austin on Thursday, according to a filing with regulators on Friday. Excluding shares owned by Musk and his brother, Kimbal, he won the support of 72 percent of the votes cast.
The measure to reincorporate in Texas won the support of 84 percent of the votes cast, representing about 63 percent of the shares, according to the document.
The results will strengthen the company’s hand as it seeks to overturn a January decision by a Delaware court to void the 2018 stock option package due to concerns about its value and the independence of the board of directors.
While the vote does not supersede the court’s decision, ratification could be instrumental in persuading the judge to reverse or modify his position. Musk’s control over the company would be strengthened, increasing the CEO’s stake to more than 20 percent from its current 13 percent.
After polls closed shortly after 4 p.m. Thursday in Austin, Musk He took the stage to address an enthusiastic crowd chanting his name, jumping up and down in celebration in front of a blue and pink neon sign in the shape of Texas.
“Damn, I love you guys,” he told the audience of carefully selected retail investors. “We have the most impressive shareholder base of any public company. . . “We are not only opening a new chapter for Tesla, we are starting a new book.”
The exultant CEO joked and noted during his speech: “What do you know? It’s 4:20 p.m.,” referring to a 2018 tweet about taking Tesla private at $420 a share. Many interpreted the price as a reference to 4/20, with April 20 being a day celebrated by marijuana smokers.
The “cyber meeting” event was the culmination of a months-long campaign by Musk and the board to rally shareholders to support the two resolutions, in what amounted to a referendum on the mercurial leadership of one of the people. richest in the world.
The votes also validated Tesla’s repositioning as a robotics and artificial intelligence company. Musk improvised on plans to develop a connected fleet of millions of fully autonomous cars and outlined a future with tens of billions of humanoid robots, which together could boost Tesla’s revenue to $1 trillion or more, he said.
Mobilizing Tesla’s retail investors was particularly important because they own about 30 percent of the shares, an abnormally high proportion for a public company. Musk also successfully lobbied institutional investors to oppose the guide from proxy advisors ISS and Glass Lewis, who criticized his salary as “outsized” and “excessive.”
In another victory, two of Musk’s crucial allies on the board were re-elected despite opposition from proxy advisers: former 21st Century Fox CEO James Murdoch and Kimbal.
The wins were not unexpected after Musk posted x Wednesday night that both resolutions “are currently passing by wide margins.”
Tesla shares rose 3 percent on Thursday after its release, but the stock’s recent performance has been disappointing. It is down 29 percent in the last year, leaving it valued at $571 billion, now closer to JPMorgan and Walmart than to fellow “Magnificent Seven” tech giants like Microsoft and Nvidia, which are worth more. of 3 billion dollars.
The drop also means Musk’s 2018 stock options are worth $48 billion compared to $56 billion previously.
However, the results are a vindication for Robyn Denholm, previously taciturn Tesla president, who arose as the voice of the communication campaign with shareholders on social networks in recent months. She leaned heavily on the “a deal is a deal” slogan, arguing that Musk hit financial and stock price targets in the original 2018 package that were considered “ridiculously ambitious.”
Her reputation was at stake after she was criticized by the Delaware judge for having a “lackadaisical approach to her supervisory obligations” and running a board that acted as “supine servants to an arrogant master.”
Behind the scenes, Denholm warned asset managers that Tesla risked losing Musk if he didn’t receive his shares. The former Australian accountant said the options were essential to keep him motivated because “his passion and hobby of his is interplanetary space travel,” one of the people said.
Musk runs SpaceX, the most valuable private company in the world that has a near monopoly on reusable rockets. Other companies include social media platform X, brain implant startup Neuralink and artificial intelligence group xAI. He has publicly threatened to develop future AI products outside of Tesla if his stake does not increase, saying he needs at least 25 percent to protect the company from activists or a hostile takeover.
“Autonomy is fundamental to the future of Tesla. . .[and]to cross that finish line it is essential that Elon is at the helm,” said Tasha Keeney, director of investment analysis and institutional strategies at Cathie Wood’s Ark Investment Management.
“We invest in disruptive innovation, achieving something that seems impossible to achieve means that there must be compensation to achieve that difficult goal,” he added.
Vanguard, Tesla’s largest shareholder with a 7.3 percent stake, changed its stance on wages, having opposed it in 2018, according to a person familiar with the results. BlackRock, the second largest, also supported both resolutions. BlackRock declined to comment and Vanguard did not respond to requests for comment.
Other notable shareholders, including Nordea Asset Management and the California Public Employees’ Retirement System, publicly opposed the re-approval.
The next stage of the salary saga is a hearing in Delaware early next month, when Judge Kathaleen McCormick will consider a $5.2 billion fee request carried out by the winning lawyers. After his ruling, Tesla can appeal the pay decision to the Delaware Supreme Court.
While Tesla can quickly file paperwork to reincorporate in Texas, it is not expected to influence the pay decision, as local courts will still have to respect the Delaware ruling.
The remaining obstacles did little to spoil the celebratory mood in Austin, where attendees lined up to sign a banner that read “Don’t mess with Tesla retail shareholders.”
Musk answered questions for more than an hour on a variety of topics, from his shoes to whether six-year-olds should be allowed to visit Tesla’s gigafactory. One shareholder was visibly shaking as he asked his “idol” a question.
Musk also claimed to have had two “homicidal maniacs” threaten his life in the past 12 months and spoke of “out of the blue” calls from Donald Trump, who he said was a fan of the Cybertruck and with whom he has been linked during an advisory role. if the former president of the United States is re-elected in November.
Applause also flooded the network.
“Congratulations to Elon for receiving the salary he was promised and for his new addition to Texas,” the state’s Republican governor, Greg Abbott, posted on X. “Welcome to a state that has no personal or corporate income tax.”
Additional reporting by Patrick Temple-West and Sujeet Indap
This story has been modified since its initial publication to correct the percentage of votes cast in favor of the Texas resolution.