Tesla shareholders have backed a record-breaking pay
package for boss Elon Musk and approved a plan to move the firm's legal
headquarters to Texas.
The deal was blocked earlier this year by a judge in Delaware over concerns it
was unfair to shareholders.
The vote is a victory for the multi-billionaire, who had campaigned fiercely
for the payout, which is worth up to $56bn (£43.9bn). The exact amount depends
on the Tesla share price.
"Hot damn, I love you guys," he told a crowd of enthusiastic
shareholders who had gathered in Texas for the firm's annual meeting.
The deal is worth an estimated 300 times what the top-earning boss in the US
made last year.
However, the vote is not binding and legal experts have said it is not clear if
the court that blocked the deal will accept the re-vote and allow the company
to restore the pay package.
"The vote changes nothing," said Mathieu Shapiro, a managing partner
at law firm Obermayer Rebmann Maxwell & Hippel.
"It only offers Tesla opportunities to try to use the vote to obtain a
better decision going forward.
“It will be interesting to see if another court is willing to credit a vote
taken after the trial court’s decision.”
The eye-popping sum had sparked criticism and raised concerns that the board of
Tesla was too submissive and close to Mr Musk.
In the January court ruling, Delaware judge Kathaleen McCormick ruled the sum
was "unfair" and the process for determining the package, by a board
dominated by Mr Musk, was "deeply flawed".
Chancellor McCormick had pointed out that Antonio Gracias, who had been a board
director at Tesla, had "the sort of personal relationship that had him
vacationing with Musk’s family on a regular basis".
She also highlighted Todd Maron, Tesla's former general counsel, "who was
Musk’s former divorce attorney and whose admiration for Musk moved him to tears
during his deposition".
Mr Musk announced that he wanted to move the firm's legal headquarters to Texas
after the court in Delaware, where it is currently incorporated, voided his pay
package, siding with a small investor who had sued over the deal.
The fight over the plan had aired concerns about Mr Musk's leadership, at a
time when Tesla's share price has fallen from its height and its position in
the electric car industry is under pressure.
But Mr Musk rallied his fan base in support of the deal, appealing particularly
to individual investors, who make up an unusually large portion of the firm's
shareholder base.
"It's a pretty ringing endorsement," said car industry analyst Karl
Brauer.
Mr Musk got more than enough shareholder support "to justify the
package," he added.
The company did not immediately disclose the margin of the vote.
Mr Musk had previewed the results in a post on his social media company, X,
formerly known as Twitter.
Shares in the company closed up nearly 3% after Mr Musk's announcement.
The compensation plan gives Mr Musk rights to roughly 300 million shares - the
equivalent to a 10% stake in the firm - as a reward for Tesla meeting a number
of goals set out in 2018 which are linked to sales, profits and the share price.
Tesla had said that Mr Musk's goals were challenging. However, the original
lawsuit that led to the Delaware court blocking the pay deal alleged that the
targets were the same as internal growth projections that were being shared
with banks.
"My understanding is that there's been about 1,100% appreciation in Tesla
stock. And that's pretty, pretty impressive. Most chief executives have never
done anything like that," said Mr Brauer.
On whether Mr Musk deserved such a large pay aware, Georg Ell, former director
of Western Europe at Tesla, told the BBC's Today programme: "If I was an
investor who put a substantial amount of money into this in 2018 and had held
it throughout the period, I’d be very happy because I would have seen anywhere
between... 13 and 16 times my money back.
"That’s a very, very good return," he said.
Mr Ell disclosed that he has a small shareholding in Tesla, worth around £6,000.
Tesla's board said Mr Musk deserved the package because the carmaker had
achieved its targets under his leadership and that it was necessary to ensure
he remains dedicated to the company.
Mr Ell said that the result of the vote gives Mr Musk "a very strong
validation"
"At Tesla of course he doesn’t do it all alone but he definitely sets the
agenda, he sets the pace and he is a relentless person to work for, there’s no
doubt about that," he said.
Tesla executives expressed support for the package in social media posts,
saying that Mr Musk was crucial to the company's success.
Meanwhile, Mr Musk promised a personal tour of Tesla's factory in Texas to some
shareholders who cast votes.
Shareholders also approved the re-election of two board members at the meeting
on Thursday: James Murdoch, the son of media tycoon Rupert Murdoch, and Mr
Musk's brother Kimbal Musk.
Source:
BBC