Tesla Inc. shareholders have voted in favor of Chief Executive Officer Elon Musk’s compensation package and the company’s state of incorporation change to Texas.
The results, announced at Tesla’s annual meeting in Austin on Thursday, reflect shareholder approval despite challenges such as declining sales and a significant drop in stock price.
Musk had hinted at the likely outcome the night before the meeting in a post on X, stating that both resolutions were “passing by wide margins.”
The electric car manufacturer did not disclose the detailed breakdown of the votes.
The approval of Musk’s pay package, although advisory, demonstrates continued investor support for his leadership.
The package had previously been nullified by a Delaware judge in January, but Tesla plans to appeal. Should the appeal fail, relocating Tesla’s legal home to Texas may provide the board an opportunity to reintroduce the compensation plan under potentially more favorable legal conditions.
Originally approved in 2018 with 73% of the vote, Musk’s compensation plan makes him eligible for up to $55.8 billion in stock options if Tesla achieves specific milestones.
Currently, the value of these options is approximately $48.4 billion, according to the Bloomberg Billionaires Index.
Musk’s leadership has been a topic of significant debate, particularly in light of his oversight of six companies and his tendency toward abrupt strategic changes.
Earlier this year, Musk orchestrated Tesla’s largest layoffs to date, only to rehire some of the affected workers weeks later.
In addition to the compensation package, shareholders voted to reelect James Murdoch and Kimbal Musk to Tesla’s board.
Murdoch, son of media mogul Rupert Murdoch, has served on the board since 2017, while Kimbal Musk, Elon’s younger brother, has been a member since 2004.
Tesla’s stock saw a modest increase of 0.3% in extended trading following the announcement, though the stock had fallen about 27% over the year compared to a 14% gain in the S&P 500 Index.
During the annual meeting, held at Tesla’s Austin headquarters, shareholders showed enthusiastic support as Musk took the stage in a black Cybertruck T-shirt.
He shared updates on the company’s progress, including the introduction of three new models, the expansion of the Supercharger network, and record production levels for Cybertrucks.
“A lot of people said Cybertruck was fake, never going to come out. Now we’re shipping a lot of Cybertrucks,” Musk stated.
In addressing his substantial pay package, Musk clarified that it is structured as options requiring him to hold Tesla stock for five years. “I can’t cut and run, nor would I want to,” he said.
The push for shareholder support involved a dedicated “Vote Tesla” website and advertising on X, with Tesla investors and executives vocalizing their backing for Musk.
Despite some opposition from significant investors like Norway’s sovereign wealth fund and the California Public Employees’ Retirement System, the measures passed.
The relocation to Texas has been formalized, with the certificate of conversion available on the Texas Secretary of State website.
However, any future compensation plan will need to be restructured to comply with Texas legal standards, should the Delaware appeal fail.
The recent shareholder vote may enhance Tesla’s position in the forthcoming appeal. Delaware Chancery Court Judge Kathaleen St. Jude McCormick’s January decision to void the compensation package cited conflicts of interest and inadequate disclosure.
The appeal’s outcome, expected later this year, will determine the next steps for Musk’s compensation plan.
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