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Elon Musk Says Tesla Shareholders Have Voted To Restore His 2018 Compensation Package

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6 months ago

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Elon Musk Says Tesla Shareholders Have Voted To Restore His 2018 Compensation Package

Topline

Tesla CEO Elon Musk said Wednesday night the company’s shareholders have voted to reinstate his massive 2018 compensation deal—estimated to be worth around $50 billion—months after it was invalidated by a Delaware judge.

Key Facts

In a post on X, Musk said the shareholder resolutions on his remuneration and reincorporating the company in Texas were “passing by wide margins.”

The post included a graph showing both measures had already garnered significantly more votes than needed to guarantee their passage.

The push to change Tesla’s state of incorporation from Delaware to Texas was also spearheaded by Musk after he conducted a “public vote” on his X account.

Musk thanked Tesla shareholders and many of his supporters on X and even responded affirmatively when one of his followers said “we got you the options now you have to make Tesla the most valuable company on Earth.”

Tesla’s shares rose 0.46% to $178.10 in premarket trading early on Thursday.

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Crucial Quote

Texas Gov. Greg Abbott congratulated Musk in a X post saying: “Congrats Elon on getting the pay you were promised and on your new incorporation in Texas. Welcome to a state that has neither a personal nor a corporate income tax.”

What To Watch For

Although the shareholder vote has been in Musk’s favor, it does not immediately overturn Delaware Court of Chancery Judge Kathaleen McCormick’s January ruling. The company has even acknowledged in its security filings that a favorable vote may not resolve the remuneration issue. However, Tesla could use the result of the vote to signal to the judge that Musk’s pay package has broad shareholder support. According to Reuters, Tesla shareholder, Donald Ball, has already filed a legal challenge against the vote. In his suit, Ball accuses Musk of using “strong-arm, coercive tactics,” to get his desired outcome in the vote.

Key Background

In January, McCormick voided Musk’s record pay package estimated to be worth around $50 billion in a case brought by a Tesla shareholder. The plaintiff argued the massive pay package was unfair to shareholders and Tesla’s board had failed in its fiduciary duty by approving it. Musk railed against the ruling and lashed out at the state of Delaware saying: “Never incorporate your company in the state of Delaware.” Musk then announced plans to hold a shareholder vote to transfer the company’s state of incorporation to Texas.

Tangent

If the pay package passes all legal hurdles, it could boost Musk’s equity in Tesla from 13% to 22%. This would get the billionaire close his demand of controlling 25% of voting power in the company. Musk has said that he is “uncomfortable growing Tesla to be a leader in AI & robotics” without having around 25% of the voting power in the company. The billionaire argued that having less than 15% power meant a “takeover by dubious interests [was]

too easy” and if his demand isn’t fulfilled he would “prefer to build products” outside of Tesla. Since then Musk’s artificial intelligence startup xAI has raised $6 billion in funding at a pre-money valuation of $18 billion.

Forbes Valuation

According to our estimates, Musk’s current net worth is $209.8 billion, making him the world richest person. The top spot on Forbes’ Real Time Billionaires ranking has changed several times in the past few weeks jumping between Musk and LVMH CEO Bernard Arnault.

Further Reading

Tesla Shareholders Vote On Elon Musk’s $50 Billion Pay Package Next Week—Here’s What’s At Stake (Forbes)

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