'Tesla is saved,' says one of his fans. Another says they stopped 'a true injustice'
Teslashareholders approved CEO Elon Musk's gigantic pay package, the electric vehicle-maker said on Thursday, a big thumbs-up to his leadership and an enticement for keeping his focus on his biggest source of wealth.
Shareholders also approved a proposal to move the company's legal home to Texas from Delaware,Teslasaid at its annual shareholder meeting in Austin, Texas. They also approved other proposals including the re-election of two board members: Musk's brother Kimbal Musk and James Murdoch, son of media mogul Rupert Murdoch.
Shareholders did increase the level of investor control by passing proposals in favor of shortening board terms to one year and lowering voting requirements for proposals to a simple majority.
"We're not just opening a new chapter forTesla, we're starting a new book," Musk said on stage at the meeting.
Musk had tipped off late on Wednesday that the proposals were garnering huge support and thanked shareholders. A chart on his social media platform X showed the resolutions were set to pass by wide margins.
Tesla last valued Musk's pay package at $44.9 billion in an April regulatory filing. It was once much as $56 billion but has declined in value in tandem with Tesla’s stock. Tesla's share price has dropped about 60% from its 2021 peak as EV sales have slowed and Musk's attention has wavered betweenTeslaand other companies he runs. The stock closed up 2.9% on Thursday.
The approval also underscores the support that Musk enjoys fromTesla's retail investor base, many of whom are vocal fans of the mercurial billionaire. The proposal passed despite opposition from some large institutional investors and proxy firms.
TheTeslaCEO could still face a long legal fight to convince a Delaware judge who invalidated the package in January, describing it as "unfathomable." He may also face fresh lawsuits on the package, which would be the largest in U.S. corporate history.
Shareholder approval for the compensation serves as both an endorsem*nt of Musk's tenure and an acknowledgment that investors do not want to risk the company's future.
In January, Musk threatened to build AI and robotics products outside ofTeslaif he failed to gain enough voting control, which essentially required the 2018 pay package to be approved.
He shifted the company's focus to robotaxis, shelving cheaper mass-market electric cars, to the concern of some investors who feared the autonomous technology will be hard to perfect.
"This vindicates Musk and allays some investor concerns around his waning interest inTesla," said Sandeep Rao, senior researcher at Leverage Shares, which ownsTesla's stock.
'Tesla is saved'
Musk's army of small-investor allies took a victory lap for the pay package's approval.Mom-and-pop investors, who hold an unusually high share of the electric-vehicle maker, are typically apathetic toward voting.But in a rare show of support, many have been campaigning on social media for weeks for the celebrity billionaire CEO's pay to be reinstated.
"An attempt to destroy Tesla foiled by retail shareholders," Omar Qazi said in a post on social media platform X after the update from Musk. "Tesla is saved," said Qazi, who posts from the handle @WholeMarsBlog and has more than 476,000 followers.
Institutional investors seemed divided on the issue. While some supported Musk's pay, others such as California Public Employees' Retirement System and proxy firms Glass Lewis and Institutional Shareholder Services urged shareholders to reject the pay package, calling the compensation excessive.
"When both the institutions and the proxy advisory firms are leaning in one direction, it's very rare for the vote to come out the other way," John Lawrence, a partner at law firm Baker Botts, told Reuters. "It shows in this case the company's understanding of the power of social media."
Backing from retail investors along with support from some big institutions was key to turning the vote in Musk's favor, a source familiar with the preliminary tally told Reuters.
'We have your back'
Musk enjoys a global fan base for transforming Tesla from a startup to a multibillion-dollar behemoth and for innovation at his other companies including rocket maker SpaceX. But standing up to powerhouse investors who voted "no" on the pay package required more than just a fan base.
Social media has been abuzz for weeks with many users, such as Alexandra Merz, who posts on platform X as @TeslaBoomerMama, calling on people to vote. The efforts prompted some non-U.S. banks and brokerages to allow Tesla investors to vote, which was not previously the case.
"Don't mess with Tesla Retail Shareholders," Merz posted on Thursday, thanking people who voted. "Your votes will help to remedy a true injustice."
Musk himself has also been actively wooing their support with regular social media posts. He had set up a separate website to educate investors on the proposals, which also included reincorporating the company in Texas, and on how to vote.
The company's board sent regular letters to shareholders highlighting Musk's importance in Tesla and alluding to the risks of losing his interest if the pay package was rejected. Musk even offered tours of Tesla's factory to certain investors who vote.
The plan worked. About 90% of the retail investors who voted were in favor, Musk said in a post on X over the weekend.
The approval is critical as Musk faces an uphill legal fight to convince the Delaware judge who said the Tesla board was "beholden" to him, while Tesla is also potentially fielding fresh lawsuits over the latest vote. Still, small investors assured their continued support.
"Shareholders have spoken, again, and hopefully now our votes can officially count," X user Alicia said in a post. "@elonmusk, we've always believed in you and will continue to do so. We have your back!"
