Topline
Tesla CEO Elon Musk said Wednesday night that the company’s shareholders have voted to reinstate his massive 2018 compensation deal — estimated to be worth about $50 billion — months after it was declared invalid by a Delaware judge.
Telsa CEO Elon Musk said company shareholders voted in favor of restoring its massive $50 … [+]
Key facts
In a post on
The message included a graph showing that both measures had already collected significantly more votes than needed to guarantee their passage.
The push to change Tesla’s incorporation status from Delaware to Texas was also led by Musk after he held a “public vote” on his X account.
Musk thanked Tesla shareholders and many of his supporters on
Shares of Tesla rose 0.46% to $178.10 in premarket trading early Thursday.
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Crucial quote
Texas Governor Greg Abbott congratulated Musk in an X-post, saying: “Congratulations Elon on receiving the paycheck you were promised and on your new founding in Texas. Welcome to a state that has neither a personal nor a corporate tax.”
What to pay attention to
While the shareholder vote may have been in Musk’s favor, Delaware Court of Chancery Judge Kathaleen McCormick’s ruling will not be immediately overturned. The company has even acknowledged in its safety filings that positive sentiment may not solve the pay problem. However, Tesla could use the outcome of the vote to make it clear to the judge that Musk’s pay package has broad support among shareholders. According to Reuters, Tesla shareholder Donald Ball has already filed a legal challenge against the vote. In his lawsuit, Ball accuses Musk of using “strong, coercive tactics” to achieve the desired outcome in the vote.
Important background
In January, McCormick destroyed Musk’s record-setting package, estimated to be worth about $50 billion, in a case brought by a Tesla shareholder. The plaintiff argued that the massive compensation package was unfair to shareholders and that Tesla’s board had failed in its fiduciary duty by approving it. Musk denounced the ruling and lashed out at the state of Delaware, saying, “Never incorporate your company in the state of Delaware.” Musk then announced plans to hold a shareholder vote to transfer the company’s incorporation status to Texas.
Tangent
If the pay package clears all regulatory hurdles, it could increase Musk’s equity in Tesla from 13% to 22%. This would allow the billionaire to fulfill his claim to control 25% of the voting rights in the company. Musk has said he is “uneasy about growing Tesla into a leader in AI and robotics” without having about 25% of the voting rights in the company. The billionaire argued that having less than 15% of power meant a “takeover by dubious interests” [was]
too easy” and if his demand is not met, he would “prefer to build products” outside of Tesla. Since then, Musk’s artificial intelligence startup xAI has raised $6 billion in funding at a pre-money valuation of $18 billion.
Forbes rating
According to our estimates, Musk’s current net worth is $209.8 billion, making him the richest person in the world. The top spot on Forbes’ Real Time Billionaires rankings has changed several times in recent weeks, with the jump between Musk and LVMH CEO Bernard Arnault.
Read further
Tesla shareholders will vote on Elon Musk’s $50 billion pay package next week – here’s what’s at stake (Forbes)