Tesla Investors Approve $56B Pay Deal for Musk

Tesla shareholders have approved a $56 billion pay package for CEO Elon Musk, which is based on achieving performance targets and stock options. This compensation plan, one of the largest in corporate history, reflects confidence in Musk's leadership and vision for the company. The deal, tied to Tesla's market value and operational milestones, highlights the company's commitment to innovation and growth under Musk's direction. Investors believe this will drive significant value for Tesla in the long term.

Boston Brand Media brings you the latest news - Tesla shareholders have endorsed a historic pay package for CEO Elon Musk and approved relocating the company's legal headquarters to Texas.

A judge in Delaware blocked the deal earlier this year, citing concerns about its fairness to shareholders.

The vote represents a win for Musk, who had vigorously lobbied for the compensation package, valued up to $56 billion (£43.9 billion), dependent on Tesla's stock performance.

"Hot damn, I love you guys," Musk told enthusiastic shareholders gathered in Texas for the annual meeting.

The compensation package is over 3,000 times what the highest-paid US CEO earned last year.

However, the vote is not legally binding, and experts say it’s uncertain if the court that blocked the deal will accept the re-vote and reinstate the pay package. "The vote changes nothing," said Mathieu Shapiro, a managing partner at Obermayer Rebmann Maxwell & Hippel.

"It only gives Tesla a chance to use the vote to seek a more favorable decision going forward. It will be interesting to see if another court credits a vote taken after the trial court’s decision." The massive sum had sparked criticism and concerns about the Tesla board's deference to Musk. In January, Delaware judge Kathaleen McCormick ruled the package was "unfair," criticizing the process managed by a Musk-dominated board as "deeply flawed."

Judge McCormick noted that Antonio Gracias, a former Tesla board member, had a close personal relationship with Musk, regularly vacationing with his family. She also highlighted Todd Maron, Tesla's former general counsel and Musk’s ex-divorce attorney, whose admiration for Musk brought him to tears during his deposition. Musk announced the move of Tesla’s legal headquarters to Texas after the Delaware court voided his pay package, siding with a small investor who sued over the deal.

The dispute raised concerns about Musk's leadership as Tesla's stock price declined from its peak and its position in the electric vehicle market faced pressure. Musk mobilized his fan base to support the deal, particularly appealing to individual investors, who form a large part of Tesla's shareholder base. "It's a pretty ringing endorsement," said automotive industry analyst Karl Brauer.

Musk garnered enough shareholder backing "to justify the package," Brauer added.

The company did not immediately disclose the vote margin. Musk previewed the results in a post on his social media platform, X, formerly known as Twitter. Shares in Tesla closed up nearly 3% following Musk's announcement.

The compensation plan grants Musk rights to about 300 million shares, equivalent to a 10% stake in the company, as a reward for Tesla achieving several 2018-set goals related to sales, profits, and the share price.

Boston Brand Media also found that, Tesla had claimed that Musk's goals were difficult to achieve. However, the original lawsuit that led to the Delaware court blocking the pay deal alleged that the targets matched internal growth projections shared with banks.

"My understanding is that there's been about 1,100% appreciation in Tesla stock. And that's pretty impressive. Most chief executives have never done anything like that," said Mr. Brauer.

Regarding whether Musk deserved such a large pay award, Georg Ell, former director of Western Europe at Tesla, told the BBC's Today programme: "If I was an investor who put a substantial amount of money into this in 2018 and had held it throughout the period, I’d be very happy because I would have seen anywhere between 13 and 16 times my money back. That’s a very, very good return," he said. Ell disclosed that he has a small shareholding in Tesla, worth around £6,000.

Tesla's board argued that Musk deserved the package because the carmaker had met its targets under his leadership and that it was necessary to ensure he remains dedicated to the company. Ell said that the result of the vote gives Musk "a very strong validation." "At Tesla, of course, he doesn’t do it all alone, but he definitely sets the agenda, he sets the pace, and he is a relentless person to work for, there’s no doubt about that," he said.

Tesla executives expressed support for the package in social media posts, saying that Musk was crucial to the company's success.

Meanwhile, Musk promised a personal tour of Tesla's factory in Texas to some shareholders who cast votes. Shareholders also approved the re-election of two board members at the meeting on Thursday: James Murdoch, the son of media tycoon Rupert Murdoch, and Musk's brother Kimbal Musk.

For questions or comments write to writers@bostonbrandmedia.com

Source: BBC‍