Elon Musk, co-founder of Tesla and SpaceX and owner of X Holdings Corp., speaks at the Milken Institute Global Conference at the Beverly Hilton Hotel on May 6, 2024 in Beverly Hills, California.
Apu Gomez | Getty Images
Tesla shares rose in premarket trading after Musk said shareholders would approve his controversial $56 billion compensation package and a resolution to move the electric car maker’s company to Texas.
Tesla shares rose 6.85% in pre-market trading at 04:49 a.m. EDT on Thursday.
Tesla shareholders have already voted on both resolutions and can have their say at the company’s annual meeting on Thursday. The first measure under consideration is whether to approve a $56 billion compensation package originally approved by shareholders in 2018 and invalidated by a Delaware judge in January.
The second resolution is whether Tesla should transfer its registration from Delaware to Texas. Musk made the suggestion earlier this year after asking his followers on social media platform X whether Tesla should make such a move — and got a resounding “yes.”
Musk now says both resolutions have so far passed “by a wide margin,” without revealing specifics.
The original pay package set aggressive targets for Tesla’s financial performance and market value — though much has changed since 2018 as the company has become one of the world’s largest electric vehicle makers.
Tesla is facing slowing growth and increasing competition, especially from Chinese companies. During that time, Musk also acquired Twitter (now known as X) and increased his focus on other projects, including his brain-computer interface company Neuralink and artificial intelligence company xAI.
Critics of the wage deal say Musk is distracted by his other efforts and that the largest package in U.S. corporate history goes too far. Recently, they said Tesla’s financial performance wasn’t up to par.
Some prominent shareholders said they planned to vote against the deal, with top proxy advisers Institutional Shareholder Services and Glass Lewis also recommending that step. The California State Teachers’ Retirement System, a massive pension fund, also opposed the plan, saying the amount was too high. Norway’s sovereign wealth fund also expressed opposition.
Shareholders who support compensation argue that Musk is critical to Tesla’s future success and that if he is not adequately compensated, the billionaire will direct his efforts elsewhere. They claimed the pay package motivated Musk.
Billionaire investor and long-time Tesla shareholder Ron Barron said his vote to approve the pay package shows Musk is key to the electric car maker’s future.
“At Barron’s, our answer is clear, loud and clear: Tesla and Elon are better together. Tesla is Elon,” he said this month.
Meanwhile, some major investors, including Vanguard Group and BlackRock, have yet to reveal how they will vote.
About The Author
