Tesla shareholders overwhelmingly approve Elon Musk’s $56bn pay package, claims CEO

Tesla shareholders have overwhelmingly re-approved Elon Musk’s controversial 2018 pay package, which was previously invalidated by a Delaware judge. The pay package, potentially worth up to $56 billion, granted Musk stock options tied to Tesla’s performance milestones. This approval from shareholders sends a strong signal of support for Musk’s leadership, despite some earlier criticisms and legal challenges.

The re-approval doesn't instantly restore Musk's pay but reflects investor confidence in his role at Tesla. Some major investors previously expressed concerns about Musk being distracted and questioned the fairness of such a large compensation.

While the complete results of the vote will be shared only at a Tesla shareholder’s meeting in Austin, later today, Musk has indicated that early voting indicates that he has the numbers favouring the restoration of the pay package and that they had surpassed the threshold needed to guarantee his victory.

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"Without his relentless drive and uncompromising standards, there would be no Tesla," said Ron Baron, chair of Baron Capital. He encouraged shareholders to reapprove Musk's pay, declaring, "Tesla is Elon."

Robyn Denholm, chair of Tesla's board, highlighted the significant returns investors have enjoyed since March 2018, emphasizing that Musk's leadership has yielded over 1,000 per cent returns. She stressed that the company is obliged to honor its commitments to Musk.

Supporters, including X CEO Linda Yaccarino, celebrated the preliminary voting results. Musk, among the world's richest individuals, vowed in a tweet to make Tesla the most valuable company globally, reinforcing his commitment to the company.

The vote illustrates the power of shareholder influence, as noted by James Park, a professor at UCLA School of Law. He described the decision as "corporate democracy in action," highlighting the significance of shareholders’ voices in corporate governance.

Earlier this year, a Delaware judge invalidated Musk's pay package, citing unfair processes. In response, Musk hinted at potentially stepping back from Tesla to pursue advanced technologies independently, raising concerns for Tesla amid challenges like weak sales and intense global competition.

Despite some investors' silence on their stance, the largest shareholders, including Vanguard Group, BlackRock, and State Street, who collectively own about 17% of Tesla stock, did not publicly comment. The detailed voting results will be disclosed at a Tesla shareholder meeting in Austin.

However, some investors remain opposed. Norges Bank Investment Management, managing Norway's sovereign wealth fund, voted against the pay package due to its size. Similarly, the California Public Employees' Retirement System (CalPERS), the largest U.S. pension fund, also opposed the deal, citing concerns over its magnitude.

Despite recognizing Musk's pivotal role in building Tesla, some stakeholders are troubled by the company's recent financial performance. Tesla has experienced a drop in sales and profits, losing market share amid increasing competition. Additionally, some shareholders believe Musk's acquisition of X has diverted his attention from Tesla during a crucial period for the company.