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Tesla’s Bet on Reapproving Musk’s Pay Package

Byadmin

Jun 17, 2024

Tesla is banking on the reapproval of Elon Musk’s massive pay package to support its efforts in overturning Delaware Chancery Court Judge Kathaleen St. Jude McCormick’s ruling, potentially leading to an appeal to the state’s Supreme Court. However, the outcome remains uncertain, with Tesla acknowledging in its proxy statement that it “cannot predict with certainty how a vote to ratify Musk’s compensation would be treated under Delaware law in these novel circumstances.”

The vote is also seen as a strategy to keep Musk focused on Tesla, particularly its advancements in AI and robotics. Earlier this year, Musk threatened to spin off Tesla’s AI work into a separate entity unless he was granted 25 percent control of Tesla’s stock. To fund his acquisition of Twitter, Musk sold approximately $38 billion worth of Tesla stock between 2021 and 2022. He currently leads six other companies. With the recent vote, Musk’s stake in Tesla could potentially increase to 20 percent, up from about 13 percent.

Leading up to the vote, Tesla used a combination of incentives and warnings to secure approval. The company offered select investors an exclusive tour of the Austin factory led by Musk himself. Conversely, it warned that failing to approve the pay package could lead Musk to abandon Tesla.

With the shareholders’ vote confirming Musk as one of the highest-compensated individuals globally, the likelihood of him leaving Tesla has diminished significantly. However, the saga surrounding his pay package is far from over.

By admin

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