After months of discussion and controversy, Tesla’s gargantuan multi-billion dollar CEO pay package has been approved by shareholders for the second time.
All in Favor
A majority of Tesla shareholders have voted in favor of a $56 billion pay package for CEO Elon Musk, after months of fierce campaigning by the billionaire businessman and the company itself.
Passed by a Large Majority
Despite opposition from various individual and institutional investors and proxy advisory firms, a stunning 72% majority voted ‘Yes’ to awarding Musk with the largest CEO compensation package in US corporate history.
Annual Shareholders Meeting
Though investors have been casting their votes over the last month, results were announced at the company’s annual shareholders meeting on Friday last week and confirmed via a company filing.
Musk Celebrating
“Hot damn, I love you guys,” Musk told a group of investors at the meeting, following the announcement. He also took to social media before the vote was finalized to share that it had already received approval by “wide margins”.
1.76 Billion Shares in Faor
The results have signaled the overwhelming support that Musk still enjoys from retail investors. Those who voted own a combined 1.76 billion shares in the company, with those voting against owning $528.9 million.
Functionally the Same as 2018 Vote
Though the final tally did not include the votes of Musk or his brother Kimbal Musk, who both own a significant number of Tesla shares, the vote share was only 1% lower than the same vote held in 2018.
Vanguard Flips on Vote
While the votes were not broken down by type of investor, some significant shifts have occurred since the first vote. Vanguard, Tesla’s second-largest shareholder after Musk, voted in favor of the package after initially moving against it in 2018.
Incentive Scheme for Musk
Musk’s CEO compensation package was first proposed in 2018 as part of an incentive scheme to achieve certain financial milestones. The milestones were achieved and the package was approved by shareholders.
Struck Down in Delaware
However, the payment was contested by some shareholders and later struck down in a court in Delaware, where Tesla was incorporated at the time.
An “Unfathomable” Package
The ruling was made earlier this year by Judge Kathaleen McCormick, who concluded that the payment amount was an “unfathomable” amount and that the decision-making process had been biased by board directors with close personal ties to Musk.
Approval Not Guaranteed
Analysts and industry figures have noted that while the news is a major vote of confidence for Musk’s abilities as CEO, it is no guarantee that the second vote will be accepted in court.
It Changes Nothing
“The vote changes nothing,” said managing partner Mathieu Shapiro, of the Obermayer Rebmann Maxwell & Hippel law firm.
Wait and See
‘It only offers Tesla opportunities to try to use the vote to obtain a better decision going forward,’ he added. “It will be interesting to see if another court is willing to credit a vote taken after the trial court’s decision.”
Not Rocket Science
Others maintain that the vote results are easy to understand given how Tesla has performed under Musk’s leadership in the past 6 years.
Impressive Appreciation
“My understanding is that there’s been about 1,100% appreciation in Tesla stock,’ said Karl Brauer, an analyst in the automotive industry. ‘And that’s pretty, pretty impressive. Most chief executives have never done anything like that.”
Reincorporation Into Texas
The CEO package wasn’t the only controversial proposal that was approved by shareholders. Tesla voters moved to incorporate the company into Texas, which will shift the headquarters out of Delaware.
Aggressive Push to Move
Musk and co. pushed aggressively for the change after the Delaware judge voided his payment package. Texas lawmakers may look more favorably on similar proposals made by Tesla in the future.
A Harsh Message
Shortly after the Delaware court ruling in January, Musk took to social media to share his disapproval, writing; “Never incorporate your company in the state of Delaware.”
Re-Elected Board Members
The meeting then confirmed that shareholders had approved the re-election of James Murdoch and Kimbal Musk to the board of directors, a decision which had also been contested by some investors due to their close relationships with the CEO.
Factory Tour for Voters
Some voters have since been randomly selected to partake in a personal tour of the Tesla gigafactory in Texas, along with vehicle designer Franz von Holzhausen.
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The post Tesla Shareholders Vote in Favor of Elon Musk’s Historic $56 Billion Pay Proposal first appeared on Liberty & Wealth.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
