Tesla Shareholders Reinstate Elon Musk’s $56 Billion Compensation Plan
Elon Musk, the CEO of Tesla and owner of X, is poised to receive a substantial increase in his wealth after Tesla shareholders voted to reinstate his $56 billion pay package. This decision follows a Delaware judge’s ruling in January that had invalidated the compensation. Additionally, shareholders approved the relocation of Tesla’s legal headquarters from Delaware to Texas, aligning with the site of its largest manufacturing facility. The announcement led to a 2.9% rise in Tesla’s stock price.
Musk celebrated the vote, which paves the way for him to potentially receive the enormous pay package. Nonetheless, the battle over the $56 billion is not concluded. The Delaware judge who initially struck down the package is likely to be asked to rule on the fairness of the latest shareholder vote under state law. Furthermore, another Tesla shareholder has recently filed a lawsuit arguing that the second vote should be declared invalid.
The pay package in question consists of stock options contingent on Tesla meeting specific performance milestones. In January, the Delaware court described the compensation as “unfathomable.” Judge Kathaleen McCormick criticized Tesla’s board for their lack of independence from Musk, their failure to negotiate at arm’s length, and their inadequate communication with shareholders before the initial vote.
Texas Governor Gregg Abbott expressed his support for Musk’s decision to relocate Tesla’s legal base to Texas, citing the state’s favorable business climate and Tesla’s significant operational presence there.
Musk, already the world’s richest person with an estimated net worth of $207 billion, stands to gain significantly from the reinstated pay package. Despite the boost, Tesla has experienced a challenging year, with a slowdown in electric vehicle sales due to reduced demand. While the stock price increased by nearly three percent following the vote, it remains 27% lower for the year.
This development marks a significant moment for Musk and Tesla as they navigate through legal challenges and market dynamics. The reinstatement of Musk’s pay package highlights the confidence Tesla shareholders have in his leadership, even amid the company’s recent hurdles.
