(Bloomberg) – Elon Musk said late Wednesday in the United States that two major proposals to re-certify his salary package and move Tesla Inc.'s legal headquarters are in the works. To Texas from Delaware they currently pass by a “wide margin.”
Most read from Bloomberg
The preliminary results are great news for Musk and Tesla, which has been drumming up support for both measures for weeks among big institutional investors and the company's army of individual shareholders. The electric car maker has set a deadline for investors of 10:59 p.m. Central Time on June 12 to vote, one day before its annual shareholder meeting.
Tesla's annual meeting will be held on June 13 at the company's headquarters in Austin. Proposition 3 would make Texas the company's legal domicile, while Proposition 4 would ask investors to re-certify the same $56 billion compensation package for CEO Musk that was struck down by a Delaware judge earlier this year.
The hotly contested pay package passed in 2018, but was struck down in January by a Delaware judge, who said investors were not fully informed of key details. Under the plan, Musk is eligible to receive up to $55.8 billion in stock options if Tesla meets certain goals, which the company has reached.
“This doesn't settle the matter completely; “The compensation package could still be considered unlawful,” analyst Alexander Potter of Piper Sandler wrote in a note to clients late Wednesday. “But a Delaware judge previously struck down the package citing limited disclosure to shareholders, and given the enhanced disclosures that preceded this vote, it is unclear why anyone would object to this newly ratified deal.”
“We expect the stock to respond positively to this news, although the upside is unlikely to be as aggressive as the downside had shareholders rejected the deal,” Potter said.
Those backers include Scottish asset manager Baillie Gifford & Co., Cathie Wood's Ark Investment Management LLC, and Ron Baron, who manages Baron Funds.
Barron, a longtime Tesla investor, said in an open letter supporting Musk's package that the will of shareholders who voted in 2018 should be favored. Without Musk, he said, “there would be no Tesla,” and that vote could determine whether he stays with the company.
Opponents include Norway's sovereign wealth fund, Norges Bank and the California Public Employees' Retirement System.
Tesla CEO Robyn Denholm has been dealing with large institutional investors and Tesla has posted several ads on X, which Musk owns. In the final days of the campaign, several Tesla engineers and current and former X executives posted in support of Musk's leadership.
The shareholder meeting will be streamed live on Thursday starting at 4:30 PM New York time.
(Updates with analyst comment in fifth paragraph.)
Most read from Bloomberg Businessweek
©2024 Bloomberg L.P