Elon Musk collects his $44.9 billion Tesla pay package in shareholder vote

DETROIT — Tesla shareholders voted Thursday to reinstate CEO Elon Musk’s record $44.9 billion salary thrown out by a Delaware judge earlier this year, sending a strong vote of confidence in his leadership of the automaker of electric vehicles.

The favorable vote does not necessarily mean that Musk will get the full stock compensation any time soon. The case will likely remain tied up in the Delaware Chancery Court and Supreme Court for months as Tesla attempts to overturn the Delaware judge’s dismissal.

Musk raised doubts about his future with Tesla this year, writing on X, the social media platform he owns, that he wanted a 25% stake in the company to prevent it from developing intelligence artificial elsewhere. A higher stake is needed to control the use of AI, he said.

Tesla has also struggled with declining sales and profit margins as demand for electric vehicles slows around the world.

But at the company’s annual meeting Thursday in Austin, Texas, Musk reassured shareholders that he would stick around, telling them he couldn’t sell any shares under the stock program. remuneration for five years.

“It’s not really cash, and I can’t run away, nor would I want to,” he said.

Elon Musk’s salary vote totals were not immediately announced, but the company said shareholders voted for Musk’s compensation plan, which was initially approved by the board of directors and shareholders six years ago.

Tesla last valued the package at $44.9 billion in an April regulatory filing. That amount once reached $56 billion, but its value has declined along with Tesla shares, which have fallen about 25% so far this year.

Chancellor Kathaleen St. Jude McCormick ruled in January in a shareholder lawsuit that Musk essentially controlled Tesla’s board when he ratified the package in 2018, and that he did not not fully informed the shareholders who approved it that same year.

Tesla said it would appeal, but asked shareholders to reapprove the plan at Thursday’s annual meeting.

A separate vote approved moving the company’s legal headquarters to Texas to avoid courts in Delaware, where Tesla is registered as a corporation.

“It’s incredible,” a jubilant Musk told the crowd gathered at Tesla’s headquarters and large factory in Austin, Texas. “I think we’re not just opening a new chapter for Tesla, we’re starting a new book.”

Musk and Tesla haven’t won everything. Shareholders approved measures reducing board members’ terms from three to one year and reducing the required vote on shareholder proposals to a simple majority.

Legal experts say the question of Elon Musk’s salary will still be decided in Delaware, largely because Elon Musk’s lawyers assured McCormick that they would not try to move the case to the Texas.

But they differ on whether the new ratification of the pay package will make it easier for Tesla to get it approved.

Charles Elson, a retired professor and founder of the University of Delaware’s corporate governance center, said he didn’t think the vote would influence McCormick, who made a ruling based on the law.

McCormick’s decision essentially made the 2018 compensation package a gift to Musk, Elson said, and it would require unanimous shareholder approval, an impossible threshold. The vote, he said, is interesting from a public perception standpoint, but “in my opinion it doesn’t affect the decision.”

John Lawrence, a Dallas-based attorney at Baker Botts who defends companies against shareholder lawsuits, acknowledged that the vote does not end the legal dispute or automatically give Musk stock options. But he says it gives Tesla a strong argument to overturn the decision.

He expects Musk and Tesla to argue that shareholders were fully informed before the final votes, so McCormick should reverse his decision. But the plaintiff in the lawsuit will argue that the vote has no impact and is not legally binding, Lawrence said.

The vote, he said, was done in accordance with Delaware law and should be reviewed by the judge.

“This shareholder vote is a strong signal that you now have an absolutely well-informed shareholder body,” he said. “The Delaware judge could still rule that this does not change his previous decision and does not require him to make a different decision in the future. But I think it definitely gives Tesla and Musk some solid ammunition to try to get him to revisit this issue. »

If the ruling stands, Musk will likely appeal to the Delaware Supreme Court, Lawrence said.

Many institutional investors have spoken out against Musk’s large payout, with some citing the company’s recent struggles. But analysts say individual shareholder votes will likely put Musk’s salary over the top.

Earlier Thursday, Tesla revealed that shareholders voted overwhelmingly in favor of Musk’s pay plan. That sent the company’s shares up 3% as markets closed.

After the votes were announced, Musk began informing shareholders about new developments in the company’s “Full Self-Driving” system. He has staked the company’s future on the development of autonomous vehicles, robots and artificial intelligence.

“Fully autonomous driving” continues to improve with new versions, and its per-mile safety is better than that of human drivers, Musk said.

“It’s really going to work. It’s going to happen. Mark my words, it’s just a matter of time,” he said.

Despite its name, “Full Self-Driving” can’t drive itself, and the company says human drivers must be ready to intervene at any time. Tesla’s “Full Self-Driving” hardware went on sale in late 2015, and Musk has used the name ever since, as the company collected data to teach its computers to drive.

In 2019, Musk promised a fleet of autonomous robo-taxis by 2020, and he said in early 2022 that cars would be autonomous that year. In April last year, Musk said the system should be ready in 2023.

Since 2021, Tesla has been testing the beta version of “Full Self-Driving” with volunteer owners. Last year, U.S. safety regulators forced Tesla to recall the software after finding the system behaved poorly at intersections and could violate traffic laws.

Musk also said the company is making huge progress on its Optimus humanoid robot. Currently, two people work at its factory in Fremont, California, removing battery cells from a production line and putting them into shipping containers, he said.

Despite laying off the team working on Tesla’s Supercharger electric vehicle charging network, Musk said he believes the company will deploy more chargers this year “that actually work” than the rest of the industry. In the second half of the year, it plans to spend $500 million on Superchargers, Musk said.