'We're starting a new book': Elon Musk runs victory lap after shareholders approve $45b pay package, move to Texas
Tesla shareholders on Thursday approved the restoration of CEO Elon Musk’s massive pay package that was thrown out by a Delaware judge, based on preliminary results of the company’s annual meeting. They also approved Tesla’s bid to move its corporate headquarters from Delaware to Texas, which Musk announced shortly after the February verdict.
Musk took a victory lap on stage in Austin immediately after the results were announced, telling those gathered, “We’re not just opening up a new chapter—we’re starting a new book.”
“It’s going to be the best book,” he said later in the sometimes-rambling speech. “It’s going to be next-level.”
Tesla previously said said in a regulatory filing that stockholders were set to approve Musk’s pay, valued around $44.9 billion, by a wide margin.
The company sought the votes after a Delaware judge threw out the pay package in January. Chancellor Kathaleen St. Jude McCormick determined that Tesla deceived shareholders when the all stock compensation was approved in 2018, so Musk is not entitled to the landmark package, which was worth nearly $56 billion before a stock slide this year.
Shares of Tesla closed Thursday up just under 3% at $182.47. The stock is down about 25% this year.
The approval of his pay almost guarantees that Musk will 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. Musk has threatened on X 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.
According to Musk, early indications suggest that shareholders also back a move to relocate Tesla’s legal home to Texas, and out of Delaware.
The move is designed to escape from the Delaware court’s oversight and possibly from McCormick’s ruling. In a January opinion on a shareholder lawsuit, the judge determined that Musk controlled the Tesla board and is not entitled to the landmark pay package.
Multiple institutional investors had 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.
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.
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.
Legal back-and-forth
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 he expects Tesla to follow through with appealing McCormick’s ruling to the Delaware Supreme Court.
