Tesla shareholders give Elon Musk a strong endorsement: multimillion-dollar compensation and move to Texas

Tesla C.E.O. Elon Musk announced that the company's shareholders have backed his $56 billion pay package. They also approved his plan to move the company's legal base to Texas.

Musk made a post on his social network X that depicted the graphs with the shareholder vote results. However, this can change anytime since the official vote will be taken at their annual meeting.

For The New York Times, "the vote result, announced at Tesla’s annual meeting in Austin, Texas, on Thursday, is a strong sign that shareholders still believe in Mr. Musk and it could persuade the judge who voided the award to reinstate it."

As for the other agenda, shareholders also approved moving Tesla's corporate registration to Texas.

In turn, they rejected a proposal that required Tesla not to interfere with workers trying to organize a union and to negotiate in "good faith" if they succeeded.

According to Robyn Denholm, chairman of Tesla's board of directors, investors could see gains from Musk's leadership, so the company had to recognize it and give him what was promised at the time.

"Elon is not only a visionary, but a C.E.O. with a proven ability to execute our mission and achieve incredibly ambitious business results that have generated extraordinary value for you," he said in a letter to shareholders before the vote.

The $56 billion package

If approved, the $56 billion package will be the most expensive compensation in the nation's corporate history. In 2018, Musk agreed to be the company's C.E.O. for ten years, and an agreement with shareholders allocated some $20.3 million as payment (his shares are estimated to reach more than $55 billion in 10 years).

As for the initial mitigating factors for this compensation, Delaware Chancery Court Chancellor Kathaleen McCormick ruled in January that Tesla's board had not adequately disclosed the payment details to its C.E.O., which was "not" fair.

However, shareholder votes validated both Musk's compensation and his plan to move his legal base from Texas, giving the tycoon two key victories during the aforementioned meeting.

The board hoped that shareholder support would get McCormick to review the ruling. However, according to Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, this "doesn't change anything."

"Welcome to a State that does not even have income tax"

The shareholders' decision was quickly celebrated by Governor Greg Abbott, who expressed himself on his social media.

"Congrats Elon on getting the pay you were promised and on your new incorporation in Texas. Welcome to a state that has neither a personal nor a corporate income tax," he said on his X account.