Tesla shareholders have given their approval to a contentious referendum regarding CEO Elon Musk’s leadership, resulting in an agreement to pay him $45bn (£35.3bn).
The results, which were released on Thursday, reflect a struggle for the billionaire tycoon to retain the largest compensation package ever awarded to an executive at a publicly traded U.S. company.
“First of all, I want to say I love you guys so much!” said Musk, expressing his elation as he took the stage after the vote.
The vote followed a ruling by a Delaware judge in January that invalidated a previous payment to Musk, which was then valued at about $56bn (£439m), citing lack of board independence from Musk’s influence and an unlawful process in reaching the amount.
The outcome is seen as a win for Musk and the Tesla board, who actively lobbied shareholders to support the deal. It could potentially challenge the judge’s decision to nullify the payment and aid in demonstrating that shareholders were adequately informed about the payment and directors’ relationships with Musk prior to voting.
Tesla’s board cautioned that Musk may sever ties with the company if the package was not approved, but Musk asserted he had substantial backing from investors.
Despite opposition from major shareholders like Norway’s sovereign wealth fund and the California State Teachers Retirement System, as well as proxy advisory firms Glass Lewis and Institutional Shareholder Services, the vote does not automatically guarantee the release of the funds, and further legal debates are expected.
The vote may trigger additional litigation that could prolong legal proceedings, and the approval of relocating Tesla’s legal headquarters from Delaware to Texas could complicate the matter further.
Tesla initially introduced Musk’s compensation package in 2017, which included stock options based on meeting specific company goals. The package was approved by shareholders in 2018 but faced legal challenges alleging board deception and unfairness.
Judge Katherine McCormick of the Delaware Chancery Court criticized Tesla’s board process for determining Musk’s compensation, highlighting conflicts of interest and close relationships with Musk’s associates. Despite this, the board aims to challenge Judge McCormick’s ruling.
Source: www.theguardian.com
