At 04:49 a.m. ET on Thursday, Tesla shares were up 6.85% in premarket trade.
Tesla shareholders have began voting on two resolutions and may have their say until the company’s annual meeting on Thursday. The first issue under discussion is whether to ratify a $56 billion compensation package that shareholders approved in 2018 but were overturned by a Delaware judge in January.
The second decision is whether Tesla should change its state of incorporation from Delaware to Texas. That idea came after Musk asked his fans on social networking site X early this year if Tesla should make such a move, and the response was a resounding yes.
Musk has now stated that both of these resolutions are now passing by “wide margins,” without providing specifics.
The inaugural pay package set high expectations for Tesla’s financial performance and market value — and, while the business has grown to become one of the world’s top electric manufacturers, much has happened since 2018.
Tesla is seeing slower development and more competition, particularly from Chinese players. During that period, Musk also acquired Twitter, which is now known as X, and has shifted his emphasis to other projects, such as his brain-computer interface firm Neuralink and artificial intelligence startup xAI.
Critics of Musk’s compensation package contend that he is distracted by other projects and that the amount, the biggest in US corporate history, is exorbitant. They have lately claimed that Tesla’s financial performance has fallen short of expectations.
Some prominent shareholders have stated that they intend to vote against the transaction, and major proxy consultants Institutional Shareholder Services and Glass Lewis have also urged this action. The California State Teachers’ Retirement System, a huge pension system, also opposed to the package, stating the amount was excessive. Similarly, Norway’s national wealth fund has expressed its objection.
Shareholders who support Musk’s salary claim that the billionaire is critical to Tesla’s future success and that if he is not well compensated, he will pursue other opportunities. They allege Musk was motivated by his salary deal.
Billionaire investor and long-time Tesla stakeholder Ron Baron has announced he will vote in support of Musk’s salary deal, implying that Musk is critical to the EV maker’s future.
“Baron Capital’s answer is unequivocal: Tesla is better with Elon. Tesla is Elon,” he stated this month.
Some significant investors, like Vanguard and Blackrock, have yet to announce how they would vote.
