Tesla shareholders have voted to reapprove CEO Elon Musk’s colossal pay package, despite a Delaware court judge voiding it earlier this year.
The Verge reports that the vote, widely regarded as a referendum on Musk’s leadership during a tumultuous period for the electric vehicle giant, saw investors also approve the relocation of Tesla’s legal home from Delaware to Texas and the reappointment of board members James Murdoch and Kimbal Musk, Elon’s brother.
Elon and Kimbal Musk (Elon Musk Archives/YouTube)
Tesla has faced numerous challenges in recent months, including declining sales, softening demand, and falling revenue. The company has also undergone significant layoffs, affecting at least 10 percent of its workforce. Additionally, Tesla’s vehicle lineup is aging and in need of an overhaul, while the success of Musk’s ventures into AI and robotics remains uncertain.
Breitbart News reported in April:
Alexander Potter of Piper Sandler expects Tesla’s deliveries to slip 0.5 percent to just under 1.8 million vehicles in 2024. Similarly, Philippe Houchois of Jefferies foresees a roughly three percent drop to 1.77 million vehicles. This gloomy outlook comes on the heels of Tesla’s disappointing first-quarter delivery numbers, which missed consensus estimates by the biggest margin ever in Bloomberg data going back seven years. This is particularly startling because Tesla has boasted about massive sales growth as the most prominent EV maker in the country.
The analysts cite slowing growth as a major concern for the electric vehicle maker. “Growth is slowing, and there’s no quick fix,” Potter wrote in his April 9 report. He believes that Tesla should be able to overcome demand issues by 2026, anticipating a lower-cost vehicle, scaled-up production of the Cybertruck, and more than half his price target stems from bullishness on the company’s driver-assistance software.
Despite these obstacles, Tesla shareholders demonstrated their unwavering support for Musk by approving a compensation package that solidifies his position as one of the highest-paid chief executives in modern history. Upon taking the stage with his arms raised in victory, Musk exclaimed, “I just want to start off by saying, hot damn, I love you guys.”
The outcome of the vote can be attributed to several factors. Shareholders sought to reward Musk for transforming Tesla into the world’s most valuable car company, generating substantial wealth for investors in the process. They also aimed to refute critics who have questioned Musk’s leadership choices in recent years, particularly as his attention has been divided among various ventures, such as the company formerly known as Twitter.
Tesla’s unique shareholder composition as a cult stock, which includes a higher proportion of retail investors compared to large institutional investors, played a significant role in the vote’s outcome. While top proxy advisory firms recommended voting against the proposal, Tesla’s retail shareholders remained steadfast in their support.
Even recent controversies, such as allegations of sexual misconduct by Musk at SpaceX and a sexual harassment lawsuit by fired employees, failed to sway the vote. Moreover, Musk’s political shift to the right did not deter investors, many of whom were reluctant to risk a potential plummet in share value if the pay package was rejected.
However, the Delaware court’s ruling striking down Musk’s pay package on the grounds of undue influence still stands. Today’s vote was part of Tesla’s unusual strategy to rectify the flaws in the process that began in 2018. As Samantha Crispin, a partner at Baker Botts, notes, “It is not automatically reinstated if the shareholders approve it. I would imagine it would be influential [and] it certainly would be something that the judge would take into consideration.”
Tesla hopes that the reapproval will aid in its efforts to overturn the Delaware Chancery Court’s decision, likely through an appeal to the state’s Supreme Court. The company acknowledges the uncertainty surrounding the outcome, stating in its proxy statement that it “cannot predict with certainty how a vote to ratify Musk’s compensation would be treated under Delaware law in these novel circumstances.”
Read more at the Verge here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
