In a decisive move, Tesla shareholders have again approved Elon Musk’s multi-billion-dollar pay package. This comes several months after a Delaware court had previously invalidated the agreement. According to Bloomberg, during Tesla’s annual shareholder meeting, stockholders signed off on a proposal to reinstate Musk’s pay package, valued at approximately USD$48 billion.
Judge Kathaleen McCormick of Delaware’s Chancery Court had earlier referred to Musk’s pay package, initially worth US$56 billion when first approved in 2018, as an “unfathomable sum.” In response to this ruling, Musk threatened to relocate Tesla’s state of incorporation to Texas. During the recent meeting, shareholders officially approved this move as well.
Implications of the shareholder vote
While Musk’s compensation approval is a significant step, it does not guarantee his substantial pay will be reinstated. The vote does not negate the judge’s initial ruling. However, Tesla is expected to appeal and use the latest shareholder vote as evidence that the company’s stockholders support the compensation plan.
Musk was visibly pleased with the outcome of the vote. “I just want to start by saying, hot damn. I love you guys,” he expressed after taking the stage at the shareholder meeting. He reassured shareholders that the reinstatement of his pay would not impact his dedication to Tesla in the short term. “It is worth emphasising that it’s Tesla stock that I have to own for five years. It’s not cash, and I can’t cut and run, nor would I want to,” Musk stated.
Looking ahead
The recent approval by Tesla shareholders underscores their confidence in Musk’s leadership and vision for the company. Despite the legal hurdles, the strong support from stockholders may play a crucial role in the upcoming appeals process. Tesla’s journey forward continues to be closely watched by investors and industry experts.
