Market Data 
Elon Musk said late on Wednesday that Tesla shareholders have re-approved a pay package worth billions that was already thrown out by a Delaware judge earlier this year in a vote that also approved moving Tesla to Texas.
The two measures – Musk’s pay package from 2018 and moving the car company’s incorporation state – are due to formally take place at the company’s annual meeting set for 3:30 pm CT on Thursday. But Musk said in a tweet overnight that both measures had the support they need to pass.
“Both Tesla shareholder resolutions are currently passing by wide margins! Thanks for your support!!,” he tweeted, along with heart emojis. He also included graphs of the votes on the measures, showing that in recent days the measures got enough votes to guarantee a win.
The compensation package, 303 million options to buy Tesla shares at a drastically reduced price, was worth $51 billion when it was voided by a Delaware judge nearly five months ago. The package was worth $46.8 billion as of Wednesday’s market close, due to a steady decline in Tesla share price (TSLA) this year.
Tesla did not respond to a request for comment on his post and had no tweet of its own or announcement on its investor sites. It did file with the Securities and Exchange Commission a collection of tweets on the subject, including the tweet from Musk.
Tesla’s board had said that if the shareholders didn’t approve the pay package, the company won’t get the attention it needs from Musk as it faces several challenges: Tesla’s stock price has slid by more than half from its peak as a trillion-dollar company in late 2021, its sales have fallen short of forecasts and its profits are squeezed by a global price war for EVs that Musk started himself.
The shareholders approved the original compensation package back in 2018, with 73% voting in favor. But Delaware Chancery Court Chancellor Kathaleen McCormick in January ruled in favor of shareholders who challenged the package. She wrote the process that Tesla board used to award the package was “deeply flawed” and that Musk and the board had failed to meet “the burden of proving that the compensation plan was fair.”
She criticized the board for being too close to the controversial CEO to represent the interests of shareholders, writing that the board committee that came up with the package included Antonio Gracias, a personal friend of Musk’s who often took family vacations with the Tesla CEO, as well as Todd Maron, “Musk’s former divorce attorney and whose admiration for Musk moved him to tears during his deposition.”
In her decision throwing out the original package, McCormick rejected the argument that Musk would be uncompensated if the package was thrown out, writing, “Musk’s preexisting equity stake provided him tens of billions of dollars for his efforts.”
Tesla’s filings argue it must keep the pay package in place to keep Musk fully engaged running Tesla and not focusing on his other companies. He is also the head of SpaceX, Neuralink and the Boring Company. And in addition to being the primary shareholder of those companies, he’s the owner of X, formerly known as Twitter.
“This is obviously not about the money,” Tesla Chair Robyn Denholm wrote in a letter to shareholders. “We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018. Elon is not a typical executive, and Tesla is not a typical company.”
Rather it’s about “what will motivate him to continue to create value for stockholders,” she wrote.
“What we recognized in 2018 and continue to recognize today is that one thing Elon most certainly does not have is unlimited time,” Denholm wrote. “Nor does he face any shortage of ideas and other places he can make an incredible difference in the world. We want those ideas, that energy and that time to be at Tesla, for the benefit of you, our owners. But that requires reciprocal respect.”
Some of the supporters of the pay package include Cathie Wood, CEO and chief investment officer of Ark Invest and a long-time Tesla bull, and Ron Baron, CEO of Baron Capital, which has Tesla as one of its top holdings with a stake worth more than $2 billion.
“Elon is the ultimate ‘key man,’” said Baron in a recent statement. “Without his relentless drive and uncompromising standards, there would be no Tesla.”
But there are some major shareholders who have said they voted against the deal, including the California State Teachers Retirement Fund as well as the Norwegian sovereign wealth fund, which has 28 million shares of Tesla stock, according to its most recent filing.
“While we appreciate the significant value generated under Mr. Musk’s leadership since the grant date in 2018, we remain concerned about the total size of the award,” said a statement from the Norwegian fund.
Part of the problem with winning support is that Musk is far more controversial now than he was in 2018 and appears to be far less focused on simply running Tesla.
He famously bought social media platform Twitter for $44 billion in 2022, selling $22.9 billion of his Tesla shares to help fund that purchase. He has been accused in multiple shareholder suits of improperly selling $7.5 billon of those shares late that year, knowing that Tesla was due to soon report disappointing sales that would reduce the company’s share price.
Under his management of Twitter, now known as X, he’s restored accounts for users who had been banned for hate speech, advocacy of violence or misinformation. Meanwhile, allegations about widespread antisemitism on the platform and Musk’s own endorsement of an antisemitic tweet have driven away many advertisers.
His management of X isn’t the only way he’s become more controversial. This week former employees of SpaceX, of which he is also CEO and primary shareholder, filed a lawsuit allegeding they were illegally fired for raising concerns about gender discrimination and sexual harassment at the rocket company.
But perhaps a more serious concern among Tesla shareholders is the pioneering electric car company itself. While shares shot up more than 1,700% between when the original package was approved in 2018 and their high point in November 2021, making Musk the richest person in the world at that time, it has lost more than half of that value since, including a 30% drop this year.
Tesla has been forced to cut prices in the face of weaker demand and increased competition from other automakers offering their own EVs.
One of Musk’s fans on X, who tweets under the handle “WholeMarsCatalog,” retweeted Musk’s tweet announcing the shareholder support and commented: Okay @elonmusk we got you the options. Now you have to make Tesla the most valuable company on Earth. Deal?” To which Musk responded with his own tweet, “Yes.”
The early market reaction to the vote was positive. Shares of Tesla rose more than 7% in pre-market trading, which could be one of its best daily gains in months.
Even with Musk’s pay package again endorsed by shareholders, the Delaware court could still have the final say.
Tesla attorneys have told the Delaware court that the move of its incorporation to Texas is not an effort to evade Delaware jurisdiction.
