New York (AFP) – Tesla boss Elon Musk claimed victory in a closely-watched shareholder vote to approve on Thursday a multibillion-dollar pay package seen as critical in keeping the mercurial CEO at the electric auto company.
Investors also backed a plan to shift Tesla’s place of incorporation from Delaware to Texas, Musk announced hours before the company’s annual meeting in Austin, Texas.
“Both Tesla shareholder resolutions are currently passing by wide margins!,” Musk said on X, adding a plethora of heart emojis.
“Thanks for your support!!”
Shares of Tesla jumped 5.1 percent in mid-morning trading. The firm has campaigned to convince shareholders to approve Musk’s giant compensation package, worth as much as $56 billion, a sum critics had derided as “absurd,” but which company brass had characterized as essential to the company’s future and a matter of shareholder democracy.
In an effort to coax more shareholder participation, Tesla launched a sweepstakes of sorts where 15 investors who voted would be randomly picked for a tour of Tesla’s plant in Austin, Texas personally led by Musk and vehicle designer Franz von Holzhausen. Winners would also get choice seats for Tesla’s annual meeting, where final election results will be announced. The company has employed the Musk-owned X platform, formerly Twitter, to publicize the effort.
– ‘Tesla is Elon’ –
Shareholders overwhelmingly backed the Musk compensation plan in 2018, but it was struck down by a Delaware judge in January, who ruled that the plan was devised in a “deeply flawed” manner given Musk’s extensive ties to key Tesla directors who blessed the plan.
This year’s vote was expected to be closer than the 2018 referendum after influential advisory firms Investor Shareholder Services and Glass Lewis came out against the windfall, with ISS dismissing the proposal as “excessive.”
In April, Tesla revived the package, with chair Robyn Denholm imploring investors to “fix this issue” after the Delaware ruling, arguing ratification would “restore Tesla’s stockholder Democracy” after the 2018 shareholder vote.
Wedbush analyst Daniel Ives described the apparent Musk win as unsurprising, given the CEO’s popularity with individual investors.
“We believe an overwhelming retail presence voting green light for both proposals was key to approval despite some large shareholders voting no,” Ives said.
“Large shareholders at the end of the day knew that voting no would risk Musk potentially eventually leaving as CEO and the risk far overweighed the reward in voting no on this proposal despite some obvious frustration with Musk.”
Ives expects Musk to recommit to stay as CEO for the next three-five years.
Musk backers, like billionaire investor Ron Baron, have offered unflinching support.
“Shareholders should ask themselves this question: is Tesla better off with or without Elon,” Baron said in a public letter. “At Baron Capital, our answer is clear, loud and unequivocal: Tesla is better with Elon. Tesla is Elon.”
Among other large shareholders, Vanguard, which holds more than seven percent of shares, declined to comment, while BlackRock, which holds around six percent, did not respond to an AFP request for comment.
But other investors including Norges Bank Investment Management, Norway’s sovereign wealth fund, have said they will vote no. So has California State Teachers’ Retirement System.
CalSTRS chief investment officer Chris Ailman told CNBC that he considers Musk “brilliant,” but that the current package is “ridiculous.”
“We need to have a serious salary. We’ll pay him 140 times the average worker pay,” Ailman said. “I think that’s more than fair.”
© 2024 AFP
