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Tesla<\/a> shareholders on Thursday approved the restoration of CEO Elon Musk\u2019s massive pay package that was thrown out by a Delaware judge, based on preliminary results of the company\u2019s annual meeting. They also approved Tesla\u2019s bid to move its corporate headquarters from Delaware to Texas, which Musk announced shortly after the February verdict.<\/p>\n Musk took a victory lap on stage in Austin immediately after the results were announced, telling those gathered, \u201cWe\u2019re not just opening up a new chapter\u2014we\u2019re starting a new book.\u201d <\/p>\n \u201cIt\u2019s going to be the best book,\u201d he said later in the sometimes-rambling speech. \u201cIt\u2019s going to be next-level.\u201d<\/p>\n Tesla previously said said in a regulatory filing<\/a> that stockholders were set to approve Musk\u2019s pay, valued around $44.9 billion, by a wide margin.<\/p>\n The company sought the votes after a Delaware judge threw out the pay package<\/a> in January. Chancellor Kathaleen St. Jude McCormick<\/a> 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.<\/p>\n Shares of Tesla closed Thursday up just under 3% at $182.47. The stock is down about 25% this year.<\/p>\n 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\u2019s future. Musk has threatened on X<\/a> to develop AI elsewhere if he doesn\u2019t get a 25% stake<\/a> in Tesla (He owns about 13% now). Musk\u2019s xAI recently received $6 billion in funding<\/a> to develop artificial intelligence.<\/p>\n According to Musk, early indications suggest that shareholders also back a move to relocate Tesla\u2019s legal home to Texas, and out of Delaware.<\/p>\n The move is designed to escape from the Delaware court\u2019s oversight and possibly from McCormick\u2019s 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.<\/p>\n 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\u2019s top five institutional shareholders, Vanguard<\/a>, BlackRock<\/a>, State Street<\/a>, Geode Capital, and Capital Research either said they don\u2019t announce their votes or wouldn\u2019t comment. They control about 17% of the votes.<\/p>\n One institutional investor who came out against the package is California\u2019s State Teachers Retirement System. The large pension fund said Tuesday that it would vote against Musk\u2019s pay \u201cbased 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.\u201d<\/p>\n In May, two big shareholder advisory firms, ISS<\/a> and Glass Lewis, recommended voting against the package.<\/a><\/p>\n 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.<\/p>\n Tesla Chairwoman Robyn Denholm, in a letter to shareholders, wrote that the package was approved by 73% of the vote six years ago. \u201cBecause 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 \u2014 and the many stockholders from whom we already have heard \u2014 as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it,\u201d she wrote.<\/p>\n 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.<\/p>\n Anticipating a quick move by Tesla, lawyers for the shareholder who filed the lawsuit seeking to block Musk\u2019s 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\u2019t seek a move. Besides, Tesla would still be a Delaware corporation at the time of this week\u2019s shareholder vote, they wrote.<\/p>\n In an order denying Tornetta\u2019s motions, Chancellor McCormick wrote that she interprets Tesla\u2019s letters to mean it has no intention of relocating the case to Texas. \u201cThe defendants\u2019 statements give me great comfort,\u201d she wrote.<\/p>\n Eric Talley, a Columbia University law professor, said he expects Tesla to follow through with appealing McCormick\u2019s ruling to the Delaware Supreme Court.<\/p>\n<\/div>\n\nLegal back-and-forth<\/h2>\n
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