Home Science Technology Elon Musk Wins Back US$44.9bn Pay Deal After Tesla Shareholder Vote

Elon Musk Wins Back US$44.9bn Pay Deal After Tesla Shareholder Vote

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FILED - April 21, 2020, Hangzhou, Hangzhou, China: ZhejiangCHINA-Customers buy electric cars at a tesla store in hangzhou, east China's zhejiang province, April 21, 2020...On the same day, tesla began to broadcast live activities on an e-commerce platform for eight days in a row. During the broadcast, tesla will give out rights such as children's electric car, 48-hour test drive right of Model 3 and charging coupon. This is tesla's latest move after it announced last week that it would open an official flagship store in a Chinese e-commerce platform...It is understood that due to the impact of COVID 19 epidemic on offline consumption, tesla has maintained the popularity with users through online live broadcasting since February this year. Some auto industry experts said that at present, the global enterprise digitization process is accelerating comprehensively, tesla cooperated with the third-party e-commerce platform, which will increase tesla's touch points in the e-commerce digital market. (Credit Image: © SIPA Asia via ZUMA Wire Photo: Longwei/SIPA Asia via ZUMA Wire/dpa
FILED - April 21, 2020, Hangzhou, Hangzhou, China: ZhejiangCHINA-Customers buy electric cars at a tesla store in hangzhou, east China's zhejiang province, April 21, 2020...On the same day, tesla began to broadcast live activities on an e-commerce platform for eight days in a row. During the broadcast, tesla will give out rights such as children's electric car, 48-hour test drive right of Model 3 and charging coupon. This is tesla's latest move after it announced last week that it would open an official flagship store in a Chinese e-commerce platform...It is understood that due to the impact of COVID 19 epidemic on offline consumption, tesla has maintained the popularity with users through online live broadcasting since February this year. Some auto industry experts said that at present, the global enterprise digitization process is accelerating comprehensively, tesla cooperated with the third-party e-commerce platform, which will increase tesla's touch points in the e-commerce digital market. (Credit Image: © SIPA Asia via ZUMA Wire Photo: Longwei/SIPA Asia via ZUMA Wire/dpa

In a significant development for electric carmaker Tesla, CEO Elon Musk has successfully regained his $44.9bn compensation package following a decisive shareholder vote.

This vote, which took place at Tesla’s annual meeting on Thursday, serves as a strong endorsement of Musk’s leadership and strategic vision for the company.

The decision comes after a tumultuous period in which a Delaware judge had previously nullified the pay package. The court had determined that Tesla’s board had failed to adequately protect shareholder interests, being overly influenced by Musk’s dominant presence within the company. The judge, Kathaleen McCormick, described the original pay package as “unfathomable” and criticized the board for not thoroughly evaluating whether such a massive incentive was necessary to retain Musk and achieve the company’s goals.

“I just want to start off by saying, hot damn, I love you guys!” an exuberant Musk declared upon taking the stage after the vote. “We have the most awesome shareholder base. I mean it’s just incredible.”

The reinstated pay deal, initially valued at $56bn at its peak during late 2021, has seen a reduction of about 25% in line with the recent drop in Tesla’s stock price. Although the shareholder vote reaffirms support for Musk, it does not immediately guarantee he will receive the pay package. It does, however, bolster Tesla’s position in appealing the Delaware ruling against the deal.

Musk’s compensation package, formulated in 2018, is contingent upon the achievement of specific operational and financial milestones, with payouts in the form of stock equating to roughly 1% of Tesla’s equity per milestone achieved. Despite controversies and a slowdown in sales due to rising competition from Chinese electric vehicle manufacturers, Tesla’s business has flourished under Musk’s leadership, propelling the company’s market value to an apex of $1.24 trillion.

Musk’s leadership extends beyond Tesla, with significant roles in other ventures including SpaceX and the social media platform X. This broad spectrum of involvement has occasionally sparked concerns regarding his ability to effectively manage multiple high-profile companies simultaneously. Additionally, Musk’s outspoken political views have often placed him at the center of public debates.

Following the announcement, Tesla shares experienced a modest rise, gaining 0.7% in after-hours trading, on top of a 2.9% increase earlier in the day spurred by Musk’s social media declaration of the shareholder backing.

Prior to the vote, Musk had publicly expressed uncertainties about his future at Tesla, suggesting in a January post on X that he might prefer to focus on artificial intelligence and robotics outside of Tesla if he couldn’t secure a 25% stake in the company. Musk remains Tesla’s largest shareholder, holding over 20% of its equity.

In addition to approving Musk’s compensation package, Tesla shareholders voted to move the company’s incorporation from Delaware to Texas and reappointed Kimbal Musk and James Murdoch to the board. The vote outcomes, however, did not disclose detailed tallies. Notably, some large institutional investors, including Norges Bank Investment Management, had opposed the deal​

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