Musk says Tesla shareholders voting in favor of his $56 bln pay package

Elon Musk

© APA | Elon Musk

# 13 June 2024 19:30 (UTC +04:00)

Tesla shareholders were set to approve Elon Musk's $56 billion pay package in what is being seen as a thumbs-up to his leadership - and an enticement for keeping his focus on the electric vehicle maker, APA reports citing Reuters.

Musk posted a chart on his social media platform X late Wednesday that showed the resolution and another vote to move the company's legal home to Texas - were set to pass by wide margins, though shareholders are allowed to change their vote up to the start of the annual meeting.

A person familiar with the preliminary voting tally confirmed that Musk posted an accurate count of the figures. The result will be announced at a meeting at Tesla's headquarters in Texas at 4:30 pm ET (2030 GMT) on Thursday.

"Thanks for your support!" Musk said.

The Tesla CEO could still face a long legal fight to convince a Delaware judge who invalidated the package in January, describing it as "unfathomable". He may also face fresh lawsuits over Thursday's vote on the package, which dates from 2018 and would be the largest in U.S. corporate history.

Shareholder approval would serve as both an endorsement of Musk's tenure and an acknowledgment that investors don't want to risk the company's future. Tesla's share price has dropped about 60% from its 2021 peak as EV sales have slowed and Musk's attention has wavered between Tesla and other companies he runs.

"This vindicates Musk and allays some investor concerns around his waning interest in Tesla," said Sandeep Rao, senior researcher at Leverage Shares, which owns Tesla's stock.

Board chair Robyn Denholm said in a regulatory filing earlier this month that reinstating the pay package was necessary for "retaining Elon's attention and motivating him."

The board said Musk deserves the package because he hit all the ambitious targets on market value, revenue and profitability.

Tesla shares rose 3.6% in Thursday trading.

Major proxy firms Glass Lewis and Institutional Shareholder Services (ISS) had urged shareholders to reject the pay package, and large investors including Norway's sovereign wealth fund and major U.S. pension funds had said they would vote against it.

The pay package would enable Musk to strengthen ownership "at the expense of diluting the value of those belonging to other shareholders," Marcie Frost, CEO of the California Public Employees' Retirement System said.

Tesla has been drumming up support for Musk's pay package, especially from retail investors, who make up an unusually high percentage of its ownership base but who often do not vote. The source familiar with the figures said a combination of big institutional investors and retail investor votes were responsible for the support.

Tesla shareholders also cast ballots on other proposals including the move of its legal headquarters from Delaware to Texas, as well as the re-election of two board members: Musk's brother Kimbal Musk and James Murdoch, son of media mogul Rupert Murdoch.

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