Elon Musk Says Tesla Shareholders Have Voted To Restore His Compensation Deal
Topline
Tesla CEO Elon Musk said Wednesday night the company’s shareholders voted to reinstate his massive 2018 compensation deal—estimated to be worth around $50 billion—months after it was invalidated by a Delaware judge.
Telsa CEO Elon Musk said the company’s shareholders have voted in favor of restoring his massive $50 … [+]
Key Facts
In a post on X, Musk said the shareholder resolutions on his pay and reincorporating the company in Texas were “passing by wide margins.”
The post included a graph showing both measures already had significantly more votes than needed to pass.
The push to change Tesla’s state of incorporation from Delaware to Texas was also spearheaded by Musk after he conducted a “public vote” on his X account.
Musk thanked Tesla shareholders and his supporters on X and answered “yes” when one of his followers said “we got you the options now you have to make Tesla the most valuable company on Earth.”
Tesla’s shares rose 0.46% to $178.10 in premarket trading Thursday.
Get Forbes Breaking News Text Alerts: We’re launching text message alerts so you’ll always know the biggest stories shaping the day’s headlines. Text “Alerts” to (201) 335-0739 or sign up here.
Crucial Quote
Texas Gov. Greg Abbott congratulated Musk in a X post: “Congrats Elon on getting the pay you were promised and on your new incorporation in Texas. Welcome to a state that has neither a personal nor a corporate income tax.”
What To Watch For
Although the shareholder vote has been in Musk’s favor, it does not immediately overturn Delaware Court of Chancery Judge Kathaleen McCormick’s January ruling. The company has even acknowledged in its security filings that a favorable vote may not solve the pay issue. However, Tesla could use the result of the vote to signal to the judge that Musk’s pay package has broad shareholder support. According to Reuters, Donald Ball, a Tesla shareholder, has already filed a legal challenge against the vote. In his suit, Ball accuses Musk of using “strong-arm, coercive tactics,” to get his desired outcome in the vote.
Key Background
In January, McCormick voided Musk’s record pay package, estimated to be worth around $50 billion, in a case brought by a Tesla shareholder. The plaintiff argued the massive pay package was unfair to shareholders and Tesla’s board had failed in its fiduciary duty by approving it. Musk railed against the ruling and lashed out at the state of Delaware: “Never incorporate your company in the state of Delaware.” Musk then announced plans to hold a shareholder vote to transfer the company’s state of incorporation to Texas.
Tangent
If the pay package passes all legal hurdles, it could boost Musk’s equity in Tesla from 13% to 22%. This would get the billionaire close to his demand of controlling 25% of voting power in the company. Musk has said he is “uncomfortable growing Tesla to be a leader in AI & robotics” without having around 25% of the voting power in the company. The billionaire argued that having less than 15% power meant a “takeover by dubious interests [was]
too easy” and if his demand isn’t fulfilled 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 Valuation
According to our estimates, Musk’s current net worth is $209.8 billion, making him the world’s richest person. The top spot on Forbes’ Real Time Billionaires ranking has changed several times in the past few weeks jumping between Musk and LVMH CEO Bernard Arnault.
Further Reading
Tesla Shareholders Vote On Elon Musk’s $50 Billion Pay Package Next Week—Here’s What’s At Stake (Forbes)
Source link
