In light of major Tesla shareholders struggling to agree to endorse the $56 billion pay package for CEO Elon Musk, the serial entrepreneur is now looking to expand the vote to retail investors.
All Tesla shareholders will vote at the June 13th annual meeting to approve Musk’s pay package. Should he win, he will control over 20 percent of the company. It is not clear what will happen if the vote is struck down, but some argue it will not nullify the judge’s rule either way.
Major shareholder T. Rowe Price said the package is strongly aligned with investors’ interested, but the California Public Employees’ Retirement System said it will oppose the pay as it is not justified based on the company’s performance. The sovereign wealth fund of Norway also said they would vote it down.
“So far, roughly 90% of retail shareholders who have voted have voted in favor of both resolutions,” Musk wrote Saturday on X.
Yeah, this is not cool.
If they actually surveyed their constituents, they would discover overwhelming support in favor.
So far, roughly 90% of retail shareholders who have voted have voted in favor of both resolutions. The public sentiment is unequivocally supportive.
— Elon Musk (@elonmusk) June 9, 2024
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On Thursday, February 1st, Musk announced he would be holding a shareholder vote on whether Tesla should be moved to Texas since it is a publicly-traded company. Legal experts at the time warned that the move might prove difficult, and said the SEC could intervene. In April, Musk formally asked his shareholders to reinstate his pay package and approve his move to Texas.
This followed from a lengthy legal battle with a Delaware judge over Musk’s pay package from Tesla, which the judge eventually blocked on the grounds that the payout was “unfathomable.” Musk now wants to cease all business in the state, having told his 172 million X followers to “never incorporate your company in the state of Delaware” in January.
The package was set to be the most expensive in American corporate history. In 2018, Musk agreed to become the CEO for one decade, and Tesla struck a deal to pay him 20.3 million stock options estimated to be worth around $55 billion at the time.
The judge argued that the board’s directors were too beholden to Musk to be impartial approvers.
Musk already moved the incorporation of SpaceX from Delaware to Texas in February, and reiterated at the time that no one, in his opinion, should do business in Delaware.
Tesla’s headquarters is already in Austin, Texas (having moved from California in 2021), so Tesla Board Chair Robyn Denholm argued that it makes sense for the company to be incorporated there too. “We do not agree with what the Delaware Court decided, and we do not think that what the Delaware Court said is how corporate law should or does work,” Denholm wrote in a letter attached to an April SEC filing.
“2024 is the year that Tesla should move home to Texas,” she wrote in a different letter to shareholders. “We are asking for your vote to approve Tesla’s move from Delaware, our current state of incorporation, to a new legal home in Texas. Texas is already our business home, and we are committed to it.”
Shane Devine is a writer covering politics and business for VT and a regular guest on The Unusual Suspects. Follow Shane’s work here.
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