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Spokane, Washington  Est. May 19, 1883

Tesla shareholders approve Elon Musk’s massive compensation package

Tesla CEO Elon Musk, seen on Capitol Hill in September, tweeted Wednesday night that enough shareholders had voted to re-approve his 2018 pay package.  (Jabin Botsford/The Washington Post)
By Faiz Siddiqui </p><p>and Trisha Thadani Washington Post

After Tesla announced Thursday that shareholders had voted to restore Elon Musk’s controversial, $50 billion pay package – solidifying his status as one of the world’s richest men – the crowd at the company’s annual shareholder meeting in Austin erupted in cheers and the elated CEO jumped onto the stage.

“Hot damn, I love you guys!” Musk said, as his fans chanted: “Elon! Elon!”

It was a decisive outcome after months of uncertainty for the electric-vehicle maker. Before the pay package was invalidated by a Delaware judge earlier this year, Musk had threatened to pull back from the company unless he was granted greater control and influence. The vote suggested strong investor confidence in Musk, despite the company’s falling sales, mass layoffs and increased regulatory scrutiny.

After his victory was announced, Musk spent over an hour making bold claims about the future of Tesla, declaring that it’s about to embark on not just a “new chapter” but a “new book.”

“It’s actually conceivable, and it’s within the realm of possibility for Tesla to achieve a valuation 10 times that of the most valuable company today,” he said. “So when I say it’s like we’re starting a new book, it’s going to be the best book.”

In a Wednesday night post on his social media platform, X, Musk said the measure passed by a “wide margin.” The final results were not immediately available Thursday.

A Delaware judge threw out the pay package, worth as much as $56 billion, earlier this year, citing its unprecedented size and its approval by a board stocked with close Musk associates. As part of the deal, struck in 2018, the board agreed to grant Musk stock options as Tesla hit certain valuation milestones.

The shareholder vote does not immediately restore Musk’s pay, but it sends a strong signal that he has the broad support of Tesla’s investors worried that Musk would make good on his threat in January to pull back from Tesla and build futuristic technology – such as robotics and artificial intelligence – “outside of Tesla.” Such a future was a daunting prospect for the electric-vehicle maker, which reported a steeper-than-expected 55% plunge in profit for the first quarter.

In the months leading up to the vote, investors large and small were split on whether to support the package. While some major shareholders criticized Musk as a distracted leader who doesn’t deserve such a reward, others lauded him for being a generational genius.

“Our answer is clear, loud and unequivocal: Tesla is better with Elon. Tesla is Elon,” Ron Baron, a billionaire and investor in Tesla, said before Thursday’s vote.

Last Wednesday, investors and Musk supporters, including X CEO Linda Yaccarino, applauded the results. Musk would have remained among the world’s richest people regardless of whether he kept the pay package, but he clearly found the victory sweet. In a post Wednesday night, he pledged to make Tesla the most valuable company on Earth.

Brad Lander, the New York City comptroller whose office owns about 3.4 million shares of Tesla and invests on behalf of public employees, said he voted against the package because of Tesla’s struggles and Musk’s insistence on dividing his attention among multiple companies. Musk’s Wednesday night tweet announcing the outcome, Lander said, was “more evidence of the failure of corporate governance at Tesla.”

“This is not how the votes are supposed to be counted and made public,” Lander said. “If this unprecedented pay package is approved, as long-term investors in Tesla, we expect a CEO who is deeply committed to the company’s growth rather than other business ventures.”

Ross Gerber, a longtime investor in Tesla and a vocal critic of Musk, said the results of the vote are great for Musk but do not address the company’s current woes, including weak sales, global competition and mass layoffs.

“If they put as much effort into selling cars … that would help,” he said.

Musk and a Tesla spokesperson did not respond to requests for comment late Wednesday.

While several key investors were vocal about their position ahead of Thursday’s meeting, others stayed silent, leaving the result unclear until Musk’s X post late Wednesday. Tesla’s largest investors – Vanguard Group, BlackRock and State Street, which collectively own about 17% of Tesla stock – did not publicly state their positions. None responded to requests for comment.

After the decision from Delaware’s Court of Chancery in January, Musk also unleashed on the state where Tesla – and many businesses – are incorporated. “Never incorporate your company in the state of Delaware,” he posted, before launching a poll and announcing a decision to hold a shareholder vote on incorporating in Texas instead.

On Thursday, Tesla said shareholders passed that measure, too.

“This shows that shareholder votes can matter,” James Park, a professor at the UCLA School of Law who studies securities regulation and corporate law, said this week before the vote. “Sometimes they are just rubber-stamping what the board has proposed, but this is corporate democracy in action.”