Tesla shareholders voted Thursday to reinstate CEO Elon Musk’s record $44.9 billion pay package, previously nullified by a Delaware judge. The vote reflects strong confidence in Musk’s leadership of the electric vehicle giant. Although the favorable vote is a significant victory for Musk, the all-stock compensation remains entangled in legal proceedings in the Delaware Chancery Court and Supreme Court.
Legal Battles and Future Prospects
Earlier this year, Chancellor Kathaleen St. Jude McCormick ruled in a shareholder lawsuit that Musk essentially controlled the Tesla board when it ratified the compensation package in 2018, which failed to fully inform shareholders. Tesla has vowed to appeal the decision but sought shareholder reapproval of the package at the annual meeting. Legal experts remain divided on whether the new shareholder vote will influence McCormick’s ruling, which made the 2018 compensation package a gift requiring unanimous shareholder approval—an unlikely threshold.
Tesla faces challenges with declining sales and profit margins amid a global slowdown in electric vehicle demand. Despite these hurdles, Musk remains optimistic about the company’s future, focusing on advancements in autonomous driving and artificial intelligence. He announced significant progress in Tesla’s “Full Self-Driving” system, stating that it continues to improve and will eventually surpass human driving safety.
Additionally, Musk highlighted advancements in the Optimus humanoid robot, with two units currently operational at Tesla’s Fremont factory, handling battery cells on the production line. Musk also mentioned plans to expand the Supercharger network, despite recent layoffs in the team responsible for the project. He anticipates deploying more working chargers this year and plans to invest $500 million in the Supercharger network in the second half of the year.
Musk’s Commitment to Tesla
At the company’s annual meeting in Austin, Texas, Musk reassured shareholders of his commitment to Tesla, emphasizing that he cannot sell any stock from the compensation package for five years. “It’s not actually cash, and I can’t cut and run, nor would I want to,” Musk stated. The vote totals were not immediately disclosed, but the company confirmed shareholder approval of Musk’s compensation plan, originally endorsed by the board and shareholders six years ago.
The anticipation of the shareholder vote positively impacted Tesla’s stock, driving it up by 3% by the close of markets on Thursday. However, the stock has declined by approximately 25% this year. The positive vote is seen as a reaffirmation of shareholder confidence in Musk’s vision for Tesla, despite the ongoing legal and market challenges.
Elon Musk’s reinstated pay package underscores the complex relationship between corporate governance and shareholder confidence at Tesla. As the legal battle over the compensation plan continues, the company remains focused on innovation and expansion. The recent shareholder vote is a significant, albeit not definitive, victory for Musk, highlighting his continued influence and the shareholders’ belief in his leadership.
