Musk touts shareholder vote approving $56 billion payment

Tesla CEO Elon Musk claimed late Wednesday that company shareholders had voted in favor of two measures, one approving the executive’s unprecedented $56 billion pay package, the other approving the company’s plans to move its headquarters to Texas.

Why this matters: With its continued dominance over the market, Tesla is, for better or worse, the future of the EV segment (at least for now). However, a list of controversies centered around the brand and its chief executive, as well as declines in profit and sales, have recently put that future in doubt. With shareholders appearing to side with Musk in large numbers, the company now has a strong vote of confidence in its favor, clearing some of the uncertainty about its next moves.

What happened

• Late on June 12 Musk posted on X – formerly known as Twitter – that the two Tesla resolutions were “currently passing by wide margins,” before thanking voters for their support.

• Although the result will officially be announced later today, Reuters backed the CEO’s claim, citing an unnamed source familiar with the voting results.

How did we get here?

In 2023, a Delaware judge sided with plaintiffs who sued Tesla over its approval of a $56 billion pay package for its CEO back in 2018. The lawsuit claimed that the company’s board of directors had not sought approval from shareholders for the compensation plan and that it had acted against their interests. Noting that its members included people close to Musk, including his brother, the judge described the board as “beholden” to its CEO in his decision to deny the payment.

In response, Tesla announced plans to transition its headquarters out of Delaware into Texas and called on shareholders to officially approve both the move and the compensation plan.

Two clear camps emerged in the months leading up to the vote. While Musk’s detractors argued that the CEO was spread too thin between his multiple ventures to warrant the historical compensation plan, his supporters pointed to Tesla’s meteoric success over the last six years. Unlike most of its peers, a large number of Tesla’s shareholders are “retail investors,” non-professional financiers that work independently from institutions.

In recent weeks, proxy firms Glass Lewis and International Shareholder Services, alongside several major stakeholders, recommended voting against the pay package. 

Although it appears both resolutions have passed, it is not clear if the vote will have an actual effect on Musk’s payment, as the court case did not focus on whether shareholders supported the package but rather on the board’s failure to uphold its fiduciary responsibilities. Tesla likely still faces a years-long battle in the Delaware courts as it attempts to appeal the ruling.

Bottom line: While the future of Musk’s salary is still up in the air, this week’s vote is a fairly resounding approval of the CEO’s leadership, at least among shareholders. It comes at a critical time for Tesla, which is facing a bit of an identity crisis amidst unprecedented competition in the EV sector.

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