Tesla Shareholders Approve CEO Elon Musk's $56 Billion Pay Package, Company Announces

Tesla's shareholders have overwhelmingly approved CEO Elon Musk's $56 billion pay package, a move that underscores their confidence in his leadership and vision for the electric vehicle maker. The approval, announced on Thursday, comes despite opposition from some large institutional investors and proxy firms.

At the annual shareholder meeting in Austin, Texas, Musk described himself as "pathologically optimistic," saying that his positive outlook was essential to the company's success. He also hinted that the proposals were garnering huge support, which was later confirmed by the company.

The approval does not, however, resolve a lawsuit on the pay package in a Delaware court, which some legal experts think could stretch out for months. The judge had previously invalidated the pay package, describing it as "unfathomable." Musk may also face fresh lawsuits on the package, which would be the largest in U.S. corporate history.

Why it Matters : The approval of Musk's pay package is significant because it shows that Tesla's retail investors are willing to overlook concerns about corporate governance and executive compensation in favor of supporting the company's visionary leader. This could have implications for the company's future direction and decision-making, particularly as Musk continues to expand his business empire.

Shareholders also approved a proposal to move the company's legal home to Texas from Delaware, as well as the re-election of two board members: Musk's brother Kimbal Musk and James Murdoch, son of media mogul Rupert Murdoch. Additionally, shareholders increased investor control by passing proposals to shorten board terms to one year and lower voting requirements for proposals to a simple majority, despite board opposition to both.

Tesla did not disclose the voting tallies, which are expected to be revealed in coming days. At least a half-million viewers watched the meeting on the livestream on social media platform X, and about 40,000 watched on YouTube.

The approval of Musk's pay package serves as both an endorsement of his tenure and an acknowledgment that investors do not want to risk the company's future. "They are brushing aside essentially key man risks, where Tesla has become even more dependent on Musk going forward," said Jason Schloetzer, a business professor at Georgetown University with expertise in corporate governance.

In an update on Tesla's performance, Musk said that the company recently shipped a record 1,300 Cybertrucks in a week and that plans for volume production of its Semi trucks were in place. He also talked at length about plans for autonomous cars, though he gave no time frame for a launch of self-driving vehicles.

Tesla's share price has dropped about 55% from its 2021 peak as EV sales have slowed and Musk's attention has wavered between Tesla and other companies he runs. The stock closed up 2.9% on Thursday.

Key Takeaways:

• Tesla shareholders have approved Elon Musk's $56 billion pay package, despite opposition from some large institutional investors and proxy firms.
• The approval underscores the support that Musk enjoys from Tesla's retail investor base, many of whom are vocal fans of the mercurial billionaire.
• The pay package is the largest in U.S. corporate history and could face fresh lawsuits and legal challenges.
• Shareholders have increased investor control by passing proposals to shorten board terms and lower voting requirements for proposals.
• The approval of Musk's pay package serves as both an endorsement of his tenure and an acknowledgment that investors do not want to risk the company's future

View this post on Instagram

A post shared by TrimFeed (@trimfeednews)