Tesla Shareholders Approve Elon Musk’s $56-Billion Pay Package

Tesla’s shareholders overwhelmingly approved on Thursday a 2018 CEO remuneration plan that would give Elon Musk a pay package of up to $56 billion in value.

At Tesla’s Annual Stockholders’ Meeting, stockholders approved the ratification of the 2018 CEO Performance Award and the redomestication of the company to Texas, the EV manufacturer said in a statement.

Stockholders, as recommended by the board, voted for a Tesla proposal to ratify the 100% performance-based stock option award to Elon Musk that was proposed to and approved by the stockholders in 2018.

The stockholder support highlighted the loyal fan base Musk still enjoys among Tesla’s retail shareholders. Several institutional investors, including California’s pension fund and Norway’s sovereign wealth fund, the world’s largest, voted against the remuneration plan.

Norges Bank Investment Management, which manages the $1.7-trillion Norwegian fund, said it voted against the proposal to ratify performance-based stock options to Musk, consistent with the vote on the same award in 2018.

“While we appreciate the significant value generated under Mr. Musk's leadership since the grant date in 2018, we remain concerned about the total size of the award, the structure given performance triggers, dilution, and lack of mitigation of key person risk,” the fund said.

Ahead of the vote, CalPERS said it would not back the huge pay package.

“The compensation is excessive when compared to executives at peer companies, highly dilutive to shareholders, and isn’t tied to the long-term profitability of Tesla,” CalPERS CEO Marcie Frost said.

Stockholders were asked to vote on the pay package proposal again after a Delaware court voided in January the remuneration plan after finding that at a minimum, Musk exercised control in connection with the transaction and the board lacked enough independent members to ask critical questions about the proposal before submitting it to the first shareholder vote in 2018.

“Swept up by the rhetoric of 'all upside,' or perhaps starry-eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?” judge Kathaleen McCormick of Delaware's Court of Chancery wrote in the decision.

The Thursday vote won’t resolve the ongoing legal disputes surrounding the pay package, it could even make in more complicated, legal experts say.

By Tsvetana Paraskova for Oilprice.com

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