DETROIT – Tesla shareholders voted Thursday to reinstate the CEO Elon Musk's record salary package of $44.9 billion The motion was dismissed by a Delaware judge earlier this 12 months, a robust vote of confidence in his leadership of the electrical vehicle maker.
The positive end result doesn’t necessarily mean that Musk will receive the stock compensation any time soon. The package will likely remain before the Delaware Chancery Court and the Supreme Court for months as Tesla tries to overturn the Delaware judge's denial.
Musk has expressed doubts about his future at Tesla this 12 months, writing on X, the social media platform he owns, that he wanted a 25% stake in the corporate to forestall him from shifting artificial intelligence development elsewhere. The higher stake is mandatory to manage the usage of artificial intelligence, he said.
Tesla can also be battling declining sales and profit margins as demand for electric vehicles declines worldwide.
But at the corporate's annual general meeting in Austin, Texas, on Thursday, Musk reassured shareholders that he would remain loyal to the corporate and told them he wouldn’t have the ability to sell shares from his compensation package for the subsequent five years.
“It's not cash and I can't just walk away and I wouldn't want to,” he said.
The total variety of votes on Musk's salary was not immediately disclosed at Tesla's annual shareholder meeting, but the corporate said shareholders voted in favor of Musk's compensation plan, which was originally approved by the board and shareholders six years ago.
Tesla had last valued the package at $44.9 billion in a regulatory filing in April. At one time it was even 56 billion dollars However, its value fell in parallel with Tesla's share price, which fell by about 40% over the past 12 months.
Treasury Secretary Kathaleen St. Jude McCormick ruled in a shareholder lawsuit in January that Musk essentially controlled Tesla's board when it ratified the package in 2018 and that he failed to completely inform shareholders who approved it that very same 12 months.
Tesla said it could appeal but urged shareholders to reapprove the package at Thursday's annual meeting.
In a separate vote, Tesla approved moving its headquarters to Texas to avoid the courts in Delaware, where it’s registered as a company.
“It's incredible,” a cheering Musk told the group gathered at Tesla's headquarters and large factory in Austin, Texas. “I think we're not just starting a new chapter for Tesla, we're starting a new book.”
Legal experts consider that the query of Musk's salary will still be decided in Delaware, mainly because Musk's lawyers have assured McCormick that they may not try to maneuver the case to Texas.
However, they disagree on whether the brand new approval of the compensation package will make it easier for Tesla to get it approved.
Charles Elson, professor emeritus and founding father of the Corporate Governance Center on the University of Delaware, said he doesn’t consider the vote will affect McCormick, who made his decision based on the law.
McCormick's decision essentially makes the 2018 compensation package a present to Musk, Elson said, and that might require unanimous approval from shareholders, an inconceivable hurdle. The vote is interesting from a public perception perspective, he said, but “in my view, it has no bearing on the decision.”
John Lawrence, a Dallas-based attorney at Baker Botts who defends corporations against shareholder lawsuits, agreed that the vote doesn’t end the litigation and doesn’t routinely give Musk the stock options. But he says it gives Tesla a robust argument to have the ruling overturned.
He expects Musk and Tesla will argue that shareholders were fully informed before the recent votes, so McCormick should reverse her decision. But the plaintiff within the lawsuit will argue that the vote has no effect and shouldn’t be legally binding, Lawrence said.
The vote was conducted under Delaware law and have to be taken into consideration by the judge, he said.
“This shareholder vote is a strong signal that you now have an absolutely well-informed shareholder group,” he said. “The judge in Delaware could still decide that this doesn't change her previous decision and she doesn't have to make a different decision in the future. But I think it definitely gives Tesla and Musk strong ammunition to try to get her to reconsider.”
If the ruling stands, Musk will likely appeal to the Delaware Supreme Court, Lawrence said.
Tesla announced earlier on Thursday that shareholders had overwhelmingly voted in favor of Musk's pay package. This caused the corporate's shares to rise by 3 percent by the close of trading. The stock has fallen by about 25 percent this 12 months.
After the votes were announced, Musk began updating shareholders on latest developments in the corporate's “Full Self-Driving” system. He has staked the corporate's future on the event of autonomous vehicles, robots and artificial intelligence.
“Fully autonomous driving” is always being improved with latest versions and there isn’t a doubt that it’ll surpass the security of human drivers, Musk said, without giving a timeframe.
“This will actually work. This will happen. Mark my words, it's just a matter of time,” he said.
Despite its name, Full Self-Driving cannot drive itself, and the corporate says human drivers have to be able to step in at any time. Tesla's Full Self-Driving hardware got here out in late 2015, and Musk has been using the name ever since as the corporate collected data to show its computers find out how to drive.
In 2019, Musk promised a fleet of autonomous robotaxis by 2020, and in early 2022 he said the cars can be autonomous that 12 months. In April, Musk said the system must be ready in 2023.
Tesla has been beta testing “fully autonomous driving” with volunteer owners since 2021. US safety authorities prompted Tesla to recall the software last 12 months after finding that the system behaved poorly at intersections and will violate traffic laws.
Musk said the corporate is making great progress on its humanoid robot Optimus. Two of them are currently in use on the factory in Fremont, California, taking battery cells from a production line and packing them into shipping containers, he said.
Despite shedding the team working on Tesla's Supercharger electric vehicle charging network, Musk believes the corporate will deploy more chargers “that actually work” this 12 months than the remaining of the industry. In the second half of the 12 months, he expects to spend $500 million on Superchargers, Musk said.
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