Tesla shareholders voted to both reapprove CEO Elon Musk’s compensation plan, once valued at $56 billion, and to reincorporate the electric vehicle maker in Texas, giving it major victories as it seeks to reassert control of the company.
The preliminary results, announced Thursday at Tesla’s annual meeting in Austin, will strengthen the company’s position as it attempts to overturn a January decision by a Delaware court to void the options package stock purchase of 2018 – the largest in U.S. history – due to concerns about its value and board independence.
Although the vote does not replace the court’s decision, ratification could prove instrumental in persuading the judge to reverse or modify his or her position. Musk’s grip on the company would be strengthened, bringing the CEO’s stake to more than 20 percent, up from 13 percent currently.
After polls closed just after 4 p.m. in Austin, Musk took the stage to address an enthusiastic crowd chanting his name, jumping up and down in celebration in front of a blue and pink neon sign shaped like from Texas.
“Damn, I love you guys,” he told the audience of carefully selected retail investors. “We have the most impressive shareholder base of any public company. . . we are not starting a new chapter, but opening a new book.
The jubilant CEO made jokes, noting during his speech “what do you know, it’s 4:20 p.m.,” recalling a 2018 tweet about taking Tesla private at $420 a share. Many interpreted the price as a reference to 4/20, with April 20 celebrated daily by marijuana smokers.
The “cyber-raid” event was the culmination of a months-long campaign by Musk and the board to rally shareholders to support the two resolutions, in what amounted to a referendum on the changing leadership of one of the richest people in the world.
The votes also validated Tesla’s repositioning as an artificial intelligence and robotics company. Musk has improvised plans to develop a connected fleet of millions of fully autonomous cars and sketched a future with tens of billions of humanoid robots, which together could boost Tesla’s revenue to a trillion dollars or more, a -he affirmed.
The mobilization of Tesla’s retail investors was particularly important because they own about 30% of the shares, an unusually high proportion for a public company. Musk also successfully pressured institutional investors to go against the advice of proxy advisors ISS and Glass Lewis, who criticized his salary as “proportionate” and “excessive.”
In another victory, two of Musk’s crucial board allies were re-elected despite opposition from proxy advisers: former 21st Century Fox Chief Executive James Murdoch and Musk’s brother Kimbal.
These victories were not unexpected after Musk posted on X Wednesday evening that both resolutions “are currently widely adopted!” »
Tesla shares rose 3 percent on Thursday following its release, but the stock’s recent performance has been disappointing. It’s down 29% over the past year, leaving it valued at $571 billion, now closer to JPMorgan and Walmart than to fellow “Magnificent Seven” tech giants such as Microsoft and Nvidia , which are worth more than $3 trillion.
The drop also means Musk’s stock options in 2018 are worth $48 billion, up from $56 billion.
Still, the results are vindication for Robyn Denholm, Tesla’s previously taciturn chairman, who has become the voice of the shareholder awareness campaign on social media in recent months. She relied heavily on the slogan “a deal is a deal,” arguing that Musk had met stock price and financial targets in the initial 2018 package that were considered “ridiculously ambitious.”
Her reputation was on the line after she was criticized by the Delaware judge for her “lackadaisical approach to her oversight duties” and for running a board that acted like “the sleeping servants of an overreaching master.”
Behind the scenes, Denholm warned asset managers that Tesla risked losing Musk if he did not receive his shares. The former Australian accountant said the options were key to staying motivated because “his passion and hobby is interplanetary space travel,” one of the people said.
Musk runs SpaceX, the world’s most valuable private company that holds a near-monopoly on reusable rockets. Other companies include social media platform X, brain implant startup Neuralink and AI group xAI. He has publicly threatened to develop future AI products outside of Tesla if his stake does not increase, saying he needs at least 25 percent to protect the company from activists or a hostile takeover. .
“Autonomy is essential to Tesla’s future. . . (and) to cross that finish line, it’s critical that Elon is at the helm,” said Tasha Keeney, director of investment analysis and institutional strategies at Cathie Wood’s Ark Investment Management.
“We invest in disruptive innovation, achieving something that seems impossible to achieve means you have to have compensation that matches that difficult goal,” she added.
Although final voting data will likely be released on Friday, a big swing has already taken place. Vanguard, Tesla’s largest shareholder with a 7.3 percent stake, changed its stance on wages, after opposing it in 2018, according to a person familiar with the results. BlackRock, the second largest, also supports both resolutions. BlackRock declined to comment and Vanguard did not respond to requests for comment.
Other major shareholders, including Nordea Asset Management and the California Public Employees’ Retirement System, publicly opposed the reapproval.
The next step in the salary saga is a hearing in Delaware early next month, when the judge, Kathaleen McCormick, will consider a $5.2 billion fee request made by the winning attorneys. After its ruling, Tesla can appeal the pay decision to the Delaware Supreme Court.
Even if Tesla can quickly file the necessary paperwork for reinstatement in Texas, it should not impact the wage decision, as local courts will still have to respect the Delaware ruling.
The remaining obstacles didn’t dampen the celebratory mood in Austin, where attendees lined up to sign a “Don’t mess with Tesla retail shareholders” flag.
Musk answered questions for more than an hour on a range of topics from his shoes to whether six-year-olds should be allowed to tour Tesla’s massive factory. A shareholder visibly trembled as he asked his “idol” a question.
Musk also claimed that two “murder maniacs” had threatened his life in the past 12 months and spoke of “out of the blue” calls from Donald Trump, who he said was a fan of the Cybertruck and with whom he is since bound in an advisory role if the former US president is re-elected in November.
Applause also poured in online.
“Congratulations to Elon on getting your promised salary and your new incorporation into Texas,” the state’s Republican governor, Greg Abbott, posted on X. “Welcome to a state with no taxes on personal income or corporate tax.”
Additional reporting by Patrick Temple-West and Sujeet Indap