Elon Musk Takes Victory Lap After 77% of Tesla Shareholders Voted for His $56 Billion Salary

Unlock Editor’s Digest for free

FT editor Roula Khalaf selects her favourite stories in this weekly newsletter.

Tesla announced on Friday that CEO Elon Musk won a clear victory in shareholder votes on his $56 billion compensation package and a proposal to move the company’s headquarters from Delaware to Texas.

Musk’s stock option package – the largest in U.S. history – was re-approved at Tesla’s annual shareholder meeting in Austin on Thursday with 77 percent of the votes cast, according to a regulatory filing. Excluding the shares owned by Musk and his brother Kimbal, the figure was 72 percent.

The plan to re-establish the company in Texas received 63 percent of the votes cast. The victory was surprising even to insiders. During a months-long, hectic election campaign, chairwoman Robyn Denholm compared the task to climbing Mount Everest.

The result is a significant boost for Musk as he tries to regain control of Tesla. The votes became a referendum on his erratic leadership, particularly his plans to transform Tesla into an artificial intelligence and robotics company.

Confirmation of his salary will also strengthen the company’s position in its attempt to overturn a January decision by a Delaware court that invalidated the 2018 stock option package due to concerns about its value and the independence of the board.

Musk was not about to boast about his victory. Early Friday morning, he posted a photo on X of a cake he was planning to send to Delaware as a “parting gift.” It was decorated with the words “Vox Populi, Vox Dei” in icing, which means “The voice of the people is the voice of God.”

Even if the vote does not overturn the court’s decision, ratification could be crucial in getting the judge to change or reverse her position. It would increase Musk’s influence over the company even further, and the CEO’s stake would increase from the current 13 percent to over 20 percent.

The day before, as polls closed in Austin at 4 p.m., Musk took the stage to address an enthusiastic crowd that chanted his name and jumped up and down in cheers in front of a blue and pink neon sign in the shape of Texas.

“Damn, I love you guys,” he told the carefully selected audience of retail investors. “We have the greatest shareholder base of any public company… We’re not just starting a new chapter for Tesla, we’re starting a new book.”

The jubilant CEO joked during his speech, noting, “What do you know, it’s 4:20 p.m.”, referring to a 2018 tweet about Tesla delisting at $420 per share. Many interpreted the price as a reference to April 20, a day celebrated by marijuana smokers.

Tesla reacted quickly and left the state. On Friday, Denholm announced in a letter to shareholders that she had already filed the documents for the new company in Texas. The chairwoman added: “The decisive approval of our shareholders confirms our commitment to the [pay] Deal” and “we intend to bring the case back before the court in Delaware to ensure that your voices … are heard.”

The next stage in the saga is a hearing in Delaware early next month, where Judge Kathaleen McCormick will rule on a $5.2 billion fee claim filed by the lawyers who successfully invalidated the pay package. After her ruling, Tesla can appeal the pay decision to the Delaware Supreme Court.

Greg Varallo, the plaintiff’s lead attorney, said: “We believe that the ratification vote demanded and forced by Elon is deeply flawed as a matter of law and legally ineffective and does not affect our case. We will respond to all arguments presented in due course.”

The key to Tesla’s success in the vote was convincing Vanguard, the company’s largest shareholder with a 7.3 percent stake, to change its stance on compensation after opposing it in 2018.

While Vanguard acknowledged that the stock award was a “significant outlier” compared to any other measure in the company’s history, it also said that “the unique circumstances of the plan’s retrospective evaluation have mitigated our concerns.”

The $9.3 trillion asset manager said it changed its position after meeting with Musk and Tesla executives, concluding that “the strong alignment of executive pay with shareholder returns since 2018 and the board’s claimed benefits related to the motivational value for the CEO of maintaining the original deal” were enough to justify its change of course.

BlackRock, the second-largest investor, also supported both resolutions. BlackRock declined to comment.

Additional reporting by Will Schmitt and Patrick Temple-West in New York