Musk’s Tesla Pay package won big margin in shareholder vote

Tesla shareholders decisively backed proposals to affirm Elon Musk’s multibillion-dollar pay package, according to voting details released Friday.

Approval of the proposals was announced at Tesla’s annual shareholder meeting on Thursday, without underlying totals. In the end, about 72% of voting shares supported the pay package, excluding shares held by Musk and his brother, Kimbal.

For months, many Tesla investors have worried about how engaged Elon Musk would be in running the electric car company after a judge in Delaware voided his pay package.

The compensation plan requires Musk to hold the shares for at least five years before selling them, and the value of the package will continue to fluctuate before he can do so. At Thursday’s closing price, the shares are worth about $48 billion.

Addressing shareholders after the vote, Musk promised he was committed to Tesla. The salary package, he said, “isn’t really money, and I can’t cut it and run away, nor would I want to.”

After gaining nearly 3 percent on Thursday, Tesla shares continued to rise on Friday, rising more than 1 percent in premarket trading, extending gains made after Musk said the pay vote was scheduled to be approved, before the official results are announced. Musk’s legions of supporters celebrated the vote online and analysts revised their reports on Tesla’s prospects.

It served as a “vote of confidence in Elon,” Bernstein analysts wrote in a note after the result. “While there is still some uncertainty surrounding the legal process and next steps, by that standard the vote was a clear approval, mitigating concerns that Elon may leave the company or direct more energy elsewhere.”

Tesla’s board hoped that a second confirmation of the wage premium, originally approved in 2018, could convince the Delaware court to reverse its decision. The judge in the case said the sentence was excessive and dictated by Musk to a board with personal ties to him.

“We believe the ratification vote that Elon demanded and coerced is deeply flawed as a matter of law, legally ineffective and does not affect our case,” said Greg Varallo, attorney for the disenchanted Tesla shareholders who challenged Musk’s payment in court, in an affirmation.

With the salary package, Musk would own 20.5% of Tesla, up from around 13%. 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 it can’t be overturned.” If he couldn’t get such a large stake, he said, “I would prefer to build products outside of Tesla.”

Even after this week’s rally, Tesla shares are down more than 20% this year, versus a 14% gain in the broader stock market. The company remains by far the most valuable car company, worth almost $600 billion, but fears of tougher competition and diminishing demand for its models have weighed on shares.

At Thursday’s shareholder meeting, Musk was characteristically upbeat about Tesla’s self-driving technology, including a promised fleet of robotaxis, and said the company’s humanoid robot, called Optimus, would turn into a multi-purpose business of its own. trillions of dollars.

Market analysts are divided on Tesla’s direction from here, with about 40% rating the stock a “buy,” 20% a “sell” and the rest a “hold,” according to FactSet. The range of price predictions is wide and has a rough average of where the stock is trading now.

Bernstein’s price target implies a 30% decline and analysts rate the stock an “underperform.” Others are more optimistic: Wedbush analysts think the stock could rise 50% from here, rating it an “outperform.” The outcome of the vote on payment was a “popping champagne moment,” they wrote. “Tesla is Musk and Musk is Tesla.”

Peter Eavis, Jack Ewing It is Michael J. de la Merced contributed reports.