Tesla shareholders have approved CEO Elon Musk’s 2018 stock option compensation package, despite ongoing legal challenges. The vote, held at the company’s Texas gigafactory, was met with cheers and a standing ovation from attendees. While the margin of victory was not disclosed, Musk expressed gratitude and enthusiasm for the outcome.
The package, which could potentially payout up to $56 billion, is still subject to the final ruling of a Delaware judge who previously voided the deal due to concerns over Musk’s part-time CEO status and lack of full disclosure to shareholders. Musk’s control over the pay package’s construction was deemed unfair, and the judge ruled that shareholders were not properly informed at the time of the vote.
Supporters of Musk and Tesla have been actively promoting the CEO’s pay package on social media, with Musk engaging with many of the posts. This has led to a flurry of regulatory filings as the company worked to cover its proxy statement bases.
Despite the approval, shareholders are likely to sue Tesla and Musk for approving a pay package for a CEO whose time is divided between multiple companies, including xAI, SpaceX, and Neuralink. In fact, Tesla and Musk have been sued twice this week for allegedly using insider information to sell Tesla stock and for starting a competing AI company.
The decision to reincorporate Tesla in Texas, rather than Delaware, may be a response to the company’s concerns over the Delaware court’s ruling. Musk has publicly criticized Delaware, stating that the state’s corporate law is “archaic” and that he will “never incorporate a company in the state of Delaware.” He then posted a poll asking whether Tesla should change its state of incorporation to Texas, and now we’re here.
Two shareholder proposals that would have required Tesla to improve its environmental, social, and governance (ESG) practices were rejected, including annual reporting on anti-harassment and discrimination efforts and adoption of collective bargaining. However, two proposals did pass, including reducing director terms to one year and requiring simple majority voting provisions in Tesla’s governing documents.
