Investors also supported Tesla’s plan to move its headquarters from Delaware to Texas, Musk announced hours before the company’s annual meeting in Austin.
“Both Tesla shareholder resolutions have now passed by large margins!” Musk said via X, adding lots of heart emojis. “Thank you for your support!!”
Tesla shares rose 5.1% in morning trading.
The company has been campaigning to convince shareholders to approve Musk’s huge compensation package, worth $56 billion. Critics have called the amount “absurd,” but company executives have framed it as essential to the company’s future and a matter of shareholder democracy. To encourage further participation, the company ran a sort of sweepstakes, randomly selecting 15 investors who voted to take part in a tour of the Tesla factory in Austin, Texas, led by Musk and vehicle designer Franz von Holzhausen. The winners will also receive special seating at Tesla’s annual meeting, where the final election results will be announced. The company has used Musk’s X platform (formerly Twitter) to promote the effort.
– “Tesla is Elon” –
Shareholders overwhelmingly supported Musk’s compensation plan in 2018, but a Delaware judge struck it down in January, ruling that the plan was “materially flawed” and conceived given Musk’s extensive ties to a key Tesla director who approved the plan.
This year’s vote was expected to be closer than the 2018 referendum, with influential consultancy firms Investor Shareholder Services and Glass Lewis opposing the windfall and ISS dismissing the proposal as “excessive”.
Tesla reinstated the package in April, with Chairman Robin Denholm pleading with investors to “get this over with” following the Delaware ruling and arguing that ratification would “restore Tesla’s shareholder democracy” after the 2018 shareholder vote.
Wedbush analyst Daniel Ives said Musk’s win wasn’t surprising given the CEO’s popularity among retail investors.
“We believe the overwhelming presence of retailers voting in favor of both proposals was key to their approval, despite some large shareholders voting against them,” Ives said.
“After all, major shareholders knew that voting against the proposal would risk Mr. Musk’s eventual departure as CEO, and, despite their obvious dissatisfaction with Mr. Musk, the risks far outweighed the benefits of voting against the proposal.”
Ives expects Musk to recommit to staying on as CEO for the next three to five years.
Musk’s allies, such as billionaire investor Ron Baron, have voiced their unwavering support.
“Shareholders must ask themselves: Is Tesla better off with Elon or without him?” Baron said in the open letter.
“Baron Capital’s answer is clear, loud and indisputable: Tesla is better with Elon. Tesla is Elon.”
Other major shareholders include Vanguard, which owns more than 7 percent of the company, and BlackRock, which owns about 6 percent, who declined to comment.
But other investors, including Norway’s sovereign wealth fund, Norges Bank Investment Management, have said they will vote against.
So is the California State Teachers Retirement System.
Chris Eilman, chief investment officer at the California State Teachers’ Retirement System, told CNBC that he thinks Musk is “great,” but that the current package is “ridiculous.”
“We need to pay him a fair wage. We’re going to pay him 140 times what the average worker makes,” Aylman said. “I think that’s fair enough.”
