[ad_1]
Tesla shareholders voted in favor of Chief Executive Officer Elon Musk’s pay package, approving a potential windfall after a Delaware court ruled it invalid, a company executive said on Thursday.
release:
2 minutes
Investors backed a plan worth up to $56 billion to buy the company, according to preliminary voting results. Musk, Company Secretary Brandon Ehrhart said at Tesla’s annual meeting in Austin, Texas.
After the preliminary voting results were announced, Musk took the microphone and said excitedly: “First of all, I just want to say, I love you guys.”
The plan was initially approved by investors in 2018, but a Delaware court overturned it in January 2024, prompting Tesla to launch a campaign to revive the plan.
Legal experts said Thursday’s vote does not necessarily mean Musk will be awarded damages, but the victory could bolster Tesla’s ability to appeal the Delaware ruling.
Tesla shares rose 0.7% in after-hours trading.
The company’s shares rose 2.9% in Thursday trading after Musk posted on social media platform X late Wednesday that investors supported the pay plan.
Analysts said passage of the pay package could ensure Tesla continues to be led by Musk, who has hinted he might exit if he holds enough of the company. Musk owns about 20.5% of Tesla by the end of 2023.
Litigation continues
In 2018, shareholders overwhelmingly supported Musk’s pay plan, but the plan was Delaware Judge Kathaleen McCormick ruled that the plan’s development was “deeply flawed” given Musk’s extensive relationships with key Tesla directors who approved it.
Tesla revived the plan in April, with Chairman Robyn Denholm imploring investors to “get this right” following the Delaware ruling and arguing that approving the plan would “restore shareholder democracy to Tesla” following a 2018 shareholder vote.
Musk backers, such as billionaire investor Ron Baron, have given unwavering support.
“Shareholders should ask themselves this question: Is Tesla better off with or without Elon?” Baron said in an open letter.
“At Baron Capital, our answer is clear, loud, and unequivocal: Tesla is better with Elon. Tesla is Elon.”
But other investors, such as the California State Teachers’ Retirement System, have balked at the plan.
Chris Ailman, chief investment officer at CalSTRS, told CNBC that he thinks Musk is “very smart” but that the current compensation package is “absurd.”
Dorothy Lund, a corporate governance expert at Columbia University Law School in New York, said the effect of the latest shareholder vote was uncertain because the plan was still blocked by a Delaware court.
But Lund said the vote could strengthen TeslaAn appeal of the McCormick ruling showed that shareholders still supported the plan even after the judge blocked it.
“That could be a way to appeal,” Lund said.
In the Delaware lawsuit, Gregory Varallo, who represents shareholders who oppose the plan, argued that the vote was irrelevant to the case.
“We believe the ratification vote requested and forced by Elon is deeply flawed as a matter of law, invalid as a matter of law, and does not impact our case,” Varallo said in an email. “We will respond to any arguments raised in due course.”
(AFP)
[ad_2]
Source link
