(Reuters) -Tesla shareholders will vote to approve a $56 billion pay package for Elon Musk and move the electric vehicle maker’s legal home to Texas, Musk said on social media platform passage with large margins.
Shareholders of the electric car maker are voting on a proposal to ratify CEO Musk’s 2018 stimulus package, valued at $56 billion at the time and the largest in corporate history, after a Delaware judge ruled it out by the board of directors approved plan had been annulled. ” to Musk.
The results will be announced during a meeting on Thursday.
A person familiar with the preliminary figures confirmed Musk’s report, saying a combination of large institutional investors and retail investors got the “yes” result across the line.
However, shareholders may change their vote up to the beginning of the annual meeting.
Tesla shareholders also cast votes on other proposals, including the move of Tesla’s legal headquarters from Delaware to Texas, as well as the re-election of two board members: Musk’s brother Kimbal Musk and James Murdoch.
Musk referred to the resolutions on his pay package and the move in his tweet and thanked shareholders for their support.
Some investors viewed the vote on Musk’s pay as a test of confidence in his leadership. While he is undoubtedly Tesla’s driving force and is credited with much of his success, the company has recently experienced declining sales and profits.
The board said the world’s richest person deserves this package because he has achieved all ambitious targets in terms of market value, turnover and profitability.
The pay package is also necessary to keep Musk committed to Tesla, the board said, even as the Delaware judge said the 2018 pay plan failed to ensure Musk spent a significant amount of time on Tesla.
Musk has threatened to build AI and robotics products outside of Tesla if he fails to gain sufficient voting control, which would require approval of the 2018 pay package.
Some major shareholders, including Norway’s sovereign wealth fund and California’s two largest pension funds, have said they will vote against the compensation because they believe the pay is excessive.
Tesla has gathered support for Musk’s pay package, especially from retail investors, who make up an unusually high percentage of the ownership base but often don’t vote.
Company executives have posted messages on X saying Musk is crucial to Tesla’s success. Tesla has taken out ads on social media and Musk has promised some voting shareholders a personal tour of Tesla’s Texas factory.
JUDICIAL BATTLE
The same package was previously rejected by a Delaware judge, who declared it invalid as an “unfathomable amount” awarded by an embattled board of directors with close personal and financial ties to its top executive.
The board held the shareholder vote as a way to boost the appeal of the ruling, in which the judge cited the board’s failure to fully inform shareholders before approving the 2018 pay package.
Musk must wait months or years for his pay package to be restored as appeals work their way to the Delaware Supreme Court.
Tesla could also face more lawsuits from some shareholders. One of them filed a lawsuit this month against the upcoming shareholder vote on Musk’s pay package and change of residence.
(Reporting by and Hyunjoo Jin in San Francisco, Greg Roumeliotis in New York and Abinaya Vijayaraghavan in Bengaluru; Editing by Nivedita Bhattacharjee and Miral Fahmy)
