By Hyunjoo Jin, Aditya Soni and Ross Kerber
SAN FRANCISCO (Reuters) – Elon Musk’s $56 billion pay package won 72% of votes cast by Tesla (NASDAQ:) investors, excluding the votes of himself and his brother, despite vocal opposition from a number of institutional investors and proxy advisory firms.
The support was roughly in line with 2018’s vote that was invalidated in January by a judge, jumpstarting the process that ended with investors once again backing the largest corporate pay package in US history.
Investors now hope the win will help Musk to focus his attention more on Telsa, whose shares have slumped as sales of electric vehicles slowed.
The approval does not, however, resolve a lawsuit on the pay package in a Delaware court, which some legal experts said could stretch out for months.
The judge invalidated the pay in January, describing it as “unfathomable.” The legal fight to recognize Thursday’s vote is expected to start in Delaware on Friday.
Vanguard, Tesla’s largest shareholder after CEO Musk, voted in favor and played a major role in passing the pay deal after first disapproving it in 2018, a note seen by Reuters showed.
Tesla listed several voting thresholds needed to approve Musk’s pay package. Under the strictest standard, which excluded the votes of shares held by Musk and his brother Kimbal Musk, it received 72% of votes cast, compared with 73% in 2018 under the same standard.
Under a looser measure of all votes cast, it received 77% support, according to Tesla’s filing.
“While it still faces legal challenges, it is a positive endorsement for CEO Musk and a relief for Tesla shareholders,” Bernstein analyst Toni Sacconaghi said in a note.
The filing did not break down the vote based on the type of investor, but it underscored the support that Musk enjoys from retail investors, many of whom are vocal fans of the mercurial billionaire.
Tesla board chair Robyn Denholm has said reinstating the pay package was necessary for “retaining Elon’s attention and motivating him”.
Musk has threatened to build artificial intelligence and robotics products outside of Tesla if he cannot get 25% voting power, which would require the stock compensation.
The proposal to reincorporate Tesla in Texas from Delaware received about 84% of votes, excluding those of board members Elon and Kimbal Musk.
Tesla shares rose less than 1% before the bell on Friday, after rallying nearly 3% in the previous session following a Musk post ahead of the vote that said the package was being approved by “wide margins”.
Investors also passed proposals with about 53% voting, including abstained votes, in favor of shortening board terms to one year and lowering voting requirements for proposals to a simple majority, despite board opposition to both.
