(Bloomberg) — Elon Musk said late Wednesday in the U.S. that two major proposals to reratify his pay package and make Tesla Inc.’s legal home moving from Delaware to Texas currently passes “wide margins”.
Most read from Bloomberg
The preliminary results are great news for Musk and for Tesla, which has been rallying support for both measures for weeks among major institutional investors and the company’s army of retail shareholders. The electric car maker set an investor deadline of 10:59 p.m. central time on June 12 for the vote, a day before its annual shareholder meeting.
Tesla’s annual meeting is June 13 at the company’s headquarters in Austin. Proposal 3 would make Texas the company’s legal home, while Proposition 4 asks investors to re-ratify the same $56 billion compensation package for Chief Executive Officer Musk that was nullified by a Delaware judge earlier this year.
The hotly contested pay package was passed in 2018 but was rejected in January by a Delaware judge, who said investors were not fully informed of key details. Under the plan, Musk will be eligible to receive as much as $55.8 billion in stock options if Tesla reaches certain milestones that the company has achieved.
“This does not completely resolve the matter; the compensation package may still be considered illegal,” Piper Sandler analyst Alexander Potter wrote in a letter to clients late Wednesday. “But a Delaware judge previously rejected the package, citing limited disclosure to shareholders, and given the extensive disclosures prior to this vote, it is unclear why anyone would object to this newly ratified deal.”
“We expect shares to react positively to this news, although the upside is unlikely to be as violent as the downside would have been had shareholders rejected the deal,” Potter said.
Backers include Scottish asset manager Baillie Gifford & Co., Cathie Wood’s Ark Investment Management LLC and Ron Baron, who runs Baron Funds.
Baron, a longtime Tesla investor, said in an open letter supporting Musk’s package that the will of shareholders who voted in 2018 is preferable. Without Musk, “there would be no Tesla,” and this vote could determine whether he stays with the company, he said.
Opponents include Norwegian sovereign wealth fund Norges Bank and the California Public Employees’ Retirement System.
Tesla Chairman Robyn Denholm has been in contact with major institutional investors and Tesla has placed several ads on X, which Musk owns. In the final days of the campaign, several Tesla engineers and current and former executives posted on X in support of Musk’s leadership.
The shareholders meeting will be streamed live on Thursday from 4:30 PM New York time.
(Updates with analyst commentary in 5th paragraph.)
Most read from Bloomberg Businessweek
©2024 BloombergLP
