Tesla shareholders vote on multi-billion dollar compensation for Elon Musk

For Tesla CEO Elon Musk, a significant decision awaits today: the shareholders of the electric car pioneer will once again decide on a multibillion-dollar compensation plan for the 52-year-old at the annual meeting. Initially, shareholders had already approved the plan in 2018 with a majority of 73 percent. However, a Delaware judge overturned the package in January following a lawsuit from investors. She found that Musk had exerted too much influence during negotiations on the board, leading to an unfair process. As shareholders were not informed of these entanglements, they were unable to make an informed decision. At the time, the value of the package was stated to be around $56 billion. Musk received the right to purchase approximately 300 million Tesla shares at the 2018 price in stages, provided the company achieved certain ambitious goals. One of these milestones was increasing the market value from $50 billion to $650 billion. Thanks to rapid growth and the enthusiasm surrounding electric vehicles, Tesla quickly reached this mark and was temporarily worth more than a trillion dollars. Currently, Tesla has a market value of approximately $575 billion. In recent weeks, Tesla has repeatedly appealed to shareholders to approve the package again. Board Chair Robyn Denholm emphasized that this was fair, given that Tesla has significantly increased in value under Musk’s leadership. Additionally, the company warned that Musk could invest his time in other ventures. Besides Tesla, Musk also leads the space company SpaceX and owns the online platform X. The vote on the extensive stock package will serve as a referendum on Musk. Some shareholders have recently criticized that he is not giving Tesla enough attention, instead engaging with X and making headlines with political statements. Musk himself indicated that he aims to control Tesla with a voting share of 25 percent before focusing his efforts on Artificial Intelligence. He currently holds 13 percent of the voting rights. Based on previous statements from institutional investors, the votes of retail investors could be decisive. Tesla indicated in the documents for the annual meeting that it is uncertain whether the package can be reinstated by a shareholder vote following the court's decision. However, a positive decision could support Tesla's appeal against the judge's ruling. The company could argue that shareholders are now aware of the closeness between Musk and the board members. Additionally, shareholders will vote on relocating the company’s headquarters from Delaware to Texas, where a large Tesla factory is located. However, the move would have no impact on Musk’s compensation since 2018.