Tesla CEO Elon Musk has won shareholder approval to reinstate his unprecedented $56bn (£44bn) pay package, marking the largest in US corporate history.
Tesla confirmed that proposals to ratify Musk's compensation deal and move the company's legal headquarters to Texas have been approved by shareholders. Enthusiastic chants of “Elon Musk, Elon Musk” filled the air as the preliminary results were unveiled at the company's annual meeting at its headquarters in Austin, Texas.
As an expression of gratitude to shareholders, Musk said: “Damn, I love you guys.”
Musk is scrambling to restore the damages, which were initially agreed upon in 2018, after a Delaware judge threw out the agreement in January over concerns about the board's transparency and independence during its approval process.
Over the past two months, Musk and Tesla's boards have sought to convince shareholders to support the deal, aiming to strengthen their appeal against the Delaware ruling.
Wall Street viewed the vote as a measure of confidence in Musk's leadership at Tesla. The automaker's shares have fallen about 60 percent since their peak in 2021 due to slowing electric vehicle sales, sparking criticism that Musk's interest was too fragmented between Tesla and his other projects. Tesla's board of directors confirmed that Musk deserves this package, after achieving all the ambitious goals related to market value, revenues and profitability.
Following the announcement, Tesla shares rose 2.9 percent, or $5.18, to close at $182.47 on Thursday, after Musk noted that key proposals had been approved “by a wide margin.”
This shareholder endorsement represents a major victory for Musk, who this week faces allegations of stalking several female employees at his company SpaceX. Musk did not respond to the accusations detailed in a Wall Street Journal report.
Despite investor support, Musk still faces a legal battle to get final approval for the payment. “Even if shareholders approved the old package, it is not clear whether the Delaware court would allow this vote to be effective,” Adam Badawi, a law professor at the University of California, Berkeley, said ahead of the annual meeting.
Tesla CEO Robyn Denholm hinted that Musk might leave the company if investors vote against the payout deal, and urged shareholders to ensure Musk remains motivated to devote his energy and vision to Tesla. Conversely, Musk has threatened to develop AI and robotics products outside of Tesla if he fails to secure enough voting control, conditional on his 2018 pay package being approved.
The record payout has polarized shareholders. Supporters included Ron Baron of Baron Capital, who praised Musk's “relentless drive and uncompromising standards” as essential to Tesla's success. Other backers included Baillie Gifford & Co, the Scottish asset manager, and Ark Investment Management, led by renowned US fund manager Cathie Wood. However, Norges Bank, a Norwegian sovereign wealth fund, and the California Public Employees Retirement System opposed Musk's proposed compensation.
Shareholder advisory firms Glass Lewis and Institutional Shareholder Services also recommended rejecting the pay package.
Daniel Ives, a technology analyst at Wedbush Securities, called the vote “a celebratory moment for Musk and Tesla shareholders.” In a note on Thursday, Ives said: “If this proposal had failed, it could have led to many negative scenarios, including Musk stepping down as CEO of Tesla. Instead, it is a day of celebration in Austin, despite Demand challenges continue, marking a pivotal period for Tesla.
“Tesla is Musk and Musk is Tesla. Shareholders spoke loudly.