Elon Musk claims he is heading for victory in Tesla $56bn pay vote

Chief says resolutions on his remuneration and electric-car maker’s Texas move are passing by ‘wide margins’

Tesla chief executive Elon Musk has claimed that shareholders are set to vote in favour of his $56 billion (€52 billion) pay award and a proposal to reincorporate the electric-car maker in Texas at its annual meeting on Thursday. Photograph: Susan Walsh/AP

Tesla chief executive Elon Musk has claimed that shareholders are set to vote in favour of his $56 billion (€52 billion) pay award and a proposal to reincorporate the electric-car maker in Texas at its annual meeting on Thursday.

“Both Tesla shareholder resolutions are currently passing by wide margins,” Mr Musk said on the social media platform X late on Wednesday, thanking investors for their support.

The results cited by Mr Musk in charts are preliminary and the votes could change at the annual meeting.

However, formal approval of the two resolutions would rank as a massive win for the mercurial chief executive, who has fought over the largest pay package in US corporate history.

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Tesla’s board has been lobbying investors to ratify again Musk’s $56 billion award – made in 2018 but voided by a Delaware judge in January because of concerns over the board’s transparency and independence.

The judgment prompted Mr Musk to demand the company change the location of its incorporation from Delaware to Texas.

If Tesla is successful in winning investors’ backing for his package, which is composed of stock options, Mr Musk’s stake in the company would increase to more than 20 per cent from 13 per cent if they were exercised. Shares in Tesla rose 3.9 per cent on Wednesday ahead of the vote.

The shareholder vote has been closely followed, with any defeat hurting Mr Musk’s credibility at a time when Tesla is in a brutal price war with Chinese electric vehicle rivals and suffering spiralling costs because of billions of dollars of investment in artificial intelligence and robotics.

Tesla chair Robyn Denholm has led the campaign to win support for both proposals, comparing her task to climbing Mount Everest.

The company has managed to win the backing of Baillie Gifford’s flagship Scottish Mortgage Investment Trust, Cathie Wood’s Ark Investment Management and Ron Baron, another big Tesla investor.

But Mr Musk’s remuneration package has divided investors, with Norway’s $1.7 trillion oil fund opposing it, citing the size of the award, its structure and how it fails to mitigate “key person risk”.

The chief executive of Calpers – the largest US public pension fund and a top-25 shareholder with a $1.67 billion stake – has also said it planned to vote against the deal.

Both ISS and Glass Lewis, the two largest proxy advisers, have also recommended shareholders reject the massive package.

In the final weeks, Tesla has ratcheted up its campaign with both current and former executives, as well as engineers, expressing their support for Mr Musk on social media. The carmaker has also offered a tour of Tesla’s factory with Musk to encourage its retail investors to vote in favour.

Tesla has an unusually high proportion of retail investors – who own about 30 per cent of the company – and the high hurdles for success for both votes, in particular the move to Texas, had meant that their backing would be critical.

On the pay vote, a simple majority must be in favour, excluding those shares owned by Musk and his brother Kimbal.

Reincorporation in Texas has a higher bar, requiring a majority of all shares outstanding, meaning those not cast are counted as a “no”. – Copyright The Financial Times Limited 2024