According to latest reports, Tesla shareholders have agreed on a $45 billion pay package for CEO Elon Musk, following a contentious vote that aimed to reinstate a last invalidated $56 billion agreement.
The approval comes amid ongoing debate over the appropriateness of such an important payout and its potential effect on shareholder worth.
The agreement of Musk’s $45 billion pay package comes despite opposition from largest shareholders, such as Norway’s sovereign wealth capital and the California State Teachers’ Retirement System, as well as proxy advisory firms Glass Lewis and Institutional Shareholder Services. Tesla’s board emphasized the potential consequences of not agreeing on the package, offering that Musk might lose interest in the organization, while Musk declared confidence in his investor backing.
The vote result thwarts concerns that a rejection might lead Musk to give less time to Tesla or even resign, as he has threatened to do if he does not get enough pay. Supporters argue that the package is important to retain Musk’s leadership and ensure his regular focus on driving Tesla’s development and innovation in areas such as AI, robotics, and autonomous vehicles.
Early indications predict that shareholders also help Tesla’s decision to relocate from Delaware to Texas, a move intended to release Delaware court oversight and potentially avoid Chancellor Kathaleen St. Jude McCormick’s ruling that invalidated Musk’s compensation package. This strategic shift could affect the jurisdiction of future lawful challenges, as reapproval of the pay package would then be done as a Texas company and potentially fall under the jurisdiction of Texas courts.
Tesla’s board, which is likely to talk about McCormick’s ruling, sought to remedy her agreement with a shareholder vote. Despite McCormick’s criticism of the compensation package, the board put forth the exact deal that the judge refused – albeit now value less money due to a fall in Tesla’s share price.