Future of Elon Musk and Tesla are on the line this week as shareholders vote on massive pay package (2024)

DETROIT (AP) — If Tesla shareholders vote against restoring Elon Musk’s $44.9 billion pay package Thursday, the CEO could deliver on threats to take artificial intelligence research to one of his other companies. Or he could even could walk away.

If they approve the all-stock compensation package that was thrown out by a Delaware judge in January, it would almost guarantee he would remain at the company he grew to be the world leader in electric vehicles, shifting to AI and robotics including autonomous vehicles, which Musk says is Tesla’s future.

But even with reapproval at Thursday’s annual shareholders’ meeting, which many analysts say is likely, there would be uncertainty. Musk has threatened on X, his social media platform, to develop AI elsewhere if he doesn’t get a 25% stake in Tesla (He owns about 13% now). Musk’s xAI recently received $6 billion in funding to develop artificial intelligence.

Wedbush Analyst Dan Ives said he expects the package to be overwhelmingly reapproved, ending a lot of uncertainty with Musk. “This issue has been an overhang on Tesla’s stock, and this will be important to move this distraction in the rearview mirror,” Ives wrote in a note to investors.

Shares of Tesla Inc. have slumped more than 30% this year with the company warning of “notably lower” sales growth in 2024.

Also on the shareholder ballot is the related issue of moving the electric vehicle maker’s legal home out of Delaware to Texas.

The move is designed to escape from the Delaware court’s oversight and possibly a ruling from Chancellor Kathaleen St. Jude McCormick that invalidated Musk’s pay package. In a January opinion on a shareholder lawsuit, the judge determined that Musk controlled the Tesla board and is not entitled to the landmark package once worth nearly $56 billion.

Multiple institutional investors have come out against that sizeable payout, some citing falling vehicle sales, price cuts and the tumbling Tesla stock price. But Tesla’s top five institutional shareholders, Vanguard, BlackRock, State Street, Geode Capital, and Capital Research either said they don’t announce their votes or wouldn’t comment. They control about 17% of the votes.

Erik Gordon, a business and law professor at the University of Michigan, said individual shareholders are likely to vote for the package, and they own more than half of Tesla’s shares.

One institutional investor who came out against the package is California’s State Teachers Retirement System. The large pension fund said Tuesday that it would vote against Musk’s pay “based on its sheer magnitude, and because the award would be extremely dilutive to shareholders. We also have concerns with the lack of focus on profitability for the company.”

In May, two big shareholder advisory firms, ISS and Glass Lewis, recommended voting against the package.

But Tesla and Musk have unleashed a furious lobbying effort to get the package approved, in posts on X, television appearances and in proxy filings with the U.S. Securities and Exchange Commission.

“Only 2 days left to protect & help grow the value of your investment in $TSLA by voting FOR ratification of the 2018 CEO Performance Award,” Tesla posted on X early Tuesday.

Tesla Chairwoman Robyn Denholm, in a letter to shareholders, wrote that the package was approved by 73% of the vote six years ago. “Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value. That strikes us — and the many stockholders from whom we already have heard — as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it,” she wrote.

Tesla has said the 2018 award incentivized Musk to create over $735 billion in value for shareholders in the six years since it was approved.

If Tesla finalizes the vote on moving the company’s legal home to Texas before the vote on Musk’s pay package, and it manages to file the paperwork in Austin and get approval of the move, then the effect of the Delaware court ruling could be in doubt. Reapproval of the pay package would then be done as a Texas corporation and could fall under the purview of Texas courts.

Anticipating a quick move by Tesla, lawyers for the shareholder who filed the lawsuit seeking to block Musk’s pay deal, Richard Tornetta, filed motions in Delaware last month seeking an order stopping Tesla from trying to move the case. Tesla responded in letters to the judge that there is no cause for such concerns because they won’t seek a move. Besides, Tesla would still be a Delaware corporation at the time of this week’s shareholder vote, they wrote.

In an order denying Tornetta’s motions, Chancellor McCormick wrote that she interprets Tesla’s letters to mean it has no intention of relocating the case to Texas. “The defendants’ statements give me great comfort,” she wrote.

Eric Talley, a Columbia University law professor, said the lawyers are unlikely to try to move the case because their livelihood is handling business cases in Delaware courts.

But it’s also possible that the unpredictable Musk could change lawyers.

McCormick, Talley said, is telling the lawyers “OK, I’m going to believe you, but I’m going to be really irritated if this is a big send up for these things that you said you’re not going to do.”

Talley, who also is a Tesla shareholder and said at present he plans to vote against Musk’s pay, expects Tesla to follow through with appealing McCormick’s ruling to the Delaware Supreme Court.

Future of Elon Musk and Tesla are on the line this week as shareholders vote on massive pay package (2024)


What does Elon Musk's pay package mean? ›

Elon Musk's pay package is based on market value, earnings, and revenue milestones. ( Dreamstime) Elon Musk's 2018 CEO Performance Award, as it is officially called, is massive, totaling $56 billion.

What percentage of Tesla shareholders are Elon Musk? ›

With the pay package, Mr. Musk would own 20.5 percent of Tesla, up from about 13 percent. Mr. Musk has said he would like a 25 percent stake, noting in January that it would be “enough to be influential, but not so much that I can't be overturned.”

Did Tesla pay package pass? ›

June 14 (Reuters) - Tesla's (TSLA.O) , opens new tab largest outside investor Vanguard said it voted in favor of CEO Elon Musk's $56 billion pay package, citing the company's performance, contributing to the passage of the record-setting arrangement on Thursday.

What is the future of Tesla stock? ›

On Wednesday, Cathie Wood and her Ark Invest firm updated its Tesla stock price target to 2,600 by 2029. Wood has long been bullish on Tesla's autonomy push and robotaxi aims. Wood's firm estimates that around 90% of Tesla's enterprise value and earnings will be attributed to the robotaxi business in 2029.

What is Elon Musk's annual salary? ›

June 13 (Reuters) - Tesla (TSLA.O) , opens new tab shareholders approved CEO Elon Musk's $56 billion pay package, the electric vehicle-maker said on Thursday, a big thumbs-up to his leadership and an incentive to keep his focus on his biggest source of wealth.

Does Elon Musk get paid from Tesla? ›

Elon Musk emerged victorious on Thursday as Tesla (TSLA) shareholders voted to approve his $56 billion compensation package, as well as a proposal to move the company's incorporation to Texas.

Who owns most of Tesla shares? ›

Elon Musk is the largest individual Tesla shareholder, holding 715.022 million shares, representing 20.6 of Tesla ownership. The Vanguard Group is Tesla's biggest institutional investor, holding 225.94 shares, representing 7% of Tesla ownership.

Does China own any part of Tesla? ›

Tesla, Inc. Unique among foreign automakers in China, the plant is wholly owned by Tesla and not operated as a joint venture with a Chinese company, the first time the government had allowed such an arrangement.

Who owned Tesla before Elon Musk? ›

Tesla was incorporated in July 2003 by Martin Eberhard and Marc Tarpenning as Tesla Motors. The company's name is a tribute to inventor and electrical engineer Nikola Tesla. In February 2004, Elon Musk joined as the company's largest shareholder; in 2008, he was named chief executive officer.

What does Tesla give their employees? ›

We provide employees and their families benefits like medical, dental, vision coverage, 401(k) and generous paid time off from day one. With flexible scheduling, fitness resources and stock benefits for everyone, we invest in team members to help them do their best work.

Are Tesla employees paid fairly? ›

Hourly pay at Tesla Motors ranges from an average of $18.21 to $38.28 an hour. Tesla Motors employees with the job title Tool and Die Maker make the most with an average hourly rate of $34.71, while employees with the title Material Handler make the least with an average hourly rate of $19.49.

Does the government pay you to get a Tesla? ›

As part of the 2023 Inflation Reduction Act, eligible businesses and tax-exempt organizations can claim up to a $7,500 credit when purchasing new Tesla vehicles with a gross vehicle weight rating (GVWR) of up to 14,000 pounds.

How much in debt is Tesla? ›

Total debt on the balance sheet as of March 2024 : $9.91 B

According to Tesla's latest financial reports the company's total debt is $9.91 B. A company's total debt is the sum of all current and non-current debts.

How high will Tesla stock go 2025? ›

Tesla Stock Price Predictions for 2025

Tesla's meteoric rise has sparked heated debate about how high the company's shares can climb in the coming years. In 2025, #TSLA could range between $22 and $389 per share based on the most bullish and bearish projections.

How much is an Elons pay package? ›

Tesla CEO Elon Musk's massive $56 billion pay package was approved by shareholders during the company's annual meeting Thursday. “Hot damn, I love you guys,” Musk said to a cheering room of Tesla shareholders and employees minutes after his pay package was approved.

What time is the Tesla shareholder meeting? ›

Thursday, June 13, 2024 | 3:30 PM CT

accessible to the public.

Who is the CEO of Tesla? ›

DETROIT — Tesla shareholders voted Thursday to restore CEO Elon Musk's record $44.9 billion pay package that was thrown out by a Delaware judge earlier this year, sending a strong vote of confidence in his leadership of the electric vehicle maker.

Who are Tesla shareholders? ›

Top Shareholders
Holder# of Shares% Holding
Elon Musk411,062,07612.89%
Vanguard Index Funds183,573,8815.76%
6 more rows

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