NATIONAL NEWS

Elon Musk wins back his $44.9 billion Tesla pay package in shareholder vote

Jun 13, 2024, 4:19 AM | Updated: 6:42 pm

DETROIT (AP) — Tesla shareholders voted Thursday to restore CEO Elon Musk’s record $44.9 billion pay package that was thrown out by a Delaware judge earlier this year, sending a strong vote of confidence in his leadership of the electric vehicle maker.

The favorable vote doesn’t necessarily mean that Musk will get the all-stock compensation anytime soon. The package is likely to remain tied up in the Delaware Chancery Court and Supreme Court for months as Tesla tries to overturn the Delaware judge’s rejection.

Musk has raised doubts about his future with Tesla this year, writing on X, the social media platform he owns, that he wanted a 25% stake in the company in order to stop him from taking artificial intelligence development elsewhere. The higher stake is needed to control the use of AI, he has said.

Tesla also has struggled with falling sales and profit margins as demand for electric vehicles slows worldwide.

But at the company’s annual meeting Thursday in Austin, Texas, Musk reassured shareholders that he will stick around, telling them he can’t sell any stock in the compensation package for five years.

“It’s not actually cash, and I can’t cut and run, nor would I want to,” he said.

Vote totals on Musk’s pay weren’t immediately announced, but the company said shareholders voted for Musk’s compensation plan, which initially was approved by the board and stockholders six years ago.

Tesla last valued the package at $44.9 billion in an April regulatory filing. It was once as much as $56 billion but has declined in value in tandem with Tesla’s stock, which has dropped about 25% so far this year.

Chancellor Kathaleen St. Jude McCormick ruled in January in a shareholder’s lawsuit that Musk essentially controlled the Tesla board when it ratified the package in 2018, and that it failed to fully inform shareholders who approved it the same year.

Tesla has said it would appeal, but asked shareholders to reapprove the package at Thursday’s annual meeting.

A separate vote approved moving the company’s legal home to Texas to avoid the courts in Delaware, where Tesla is registered as a corporation.

“Its incredible,” a jubilant Musk told the crowd gathered at Tesla’s headquarters and large factory in Austin, Texas. “I think we’re not just opening a new chapter for Tesla, we’re starting a new book.”

Musk and Tesla didn’t win everything. Shareholders approved measures that trimmed board member terms from three years to one and cut the required vote on shareholder proposals to a simple majority.

Legal experts say the issue of Musk’s pay will still be decided in Delaware, largely because Musk’s lawyers have assured McCormick they won’t try to move the case to Texas.

But they differ on whether the new ratification of the pay package will make it easier for Tesla to get it approved.

Charles Elson, a retired professor and founder of the corporate governance center at the University of Delaware, said he doesn’t think the vote will influence McCormick, who issued a decision based on the law.

McCormick’s ruling essentially made the 2018 compensation package a gift to Musk, Elson said, and that would need unanimous shareholder approval, an impossible threshold. The vote, he said, is interesting from a public perception standpoint, but “in my view it does not affect the ruling.”

John Lawrence, a Dallas-based lawyer with Baker Botts who defends corporations against shareholder lawsuits, agreed the vote doesn’t end the legal dispute and automatically give Musk the stock options. But he says it gives Tesla a strong argument to get the ruling overturned.

He expects Musk and Tesla to argue that shareholders were fully informed before the latest votes, so McCormick should reverse her decision. But the plaintiff in the lawsuit will argue that the vote has no impact and isn’t legally binding, Lawrence said.

The vote, he said, was done under Delaware law and should be considered by the judge.

“This shareholder vote is a strong signal that you now have an absolutely well-informed body of shareholders,” he said. “The judge in Delaware still could decide that this doesn’t change a thing about her prior ruling and doesn’t require her to make any different ruling going forward. But I think it definitely gives Tesla and Musk strong ammunition to try to get her to revisit this.”

If the ruling stands, then Musk likely will appeal to the Delaware Supreme Court, Lawrence said.

Multiple institutional investors have come out against Musk’s sizeable payout, some citing the company’s recent struggles. But analysts said votes by individual shareholders likely put Musk’s pay over the top.

Earlier Thursday, Tesla disclosed that shareholders were voting for Musk’s pay package by a wide margin. That drove the company’s shares up 3% by the time the markets closed.

After the votes were announced, Musk began telling shareholders about new developments in the company’s “Full Self-Driving” system. He has staked the company’s future on development of autonomous vehicles, robots and artificial intelligence.

“Full Self-Driving” keeps improving with new versions, and its safety per mile is better than human drivers, Musk said.

“This is actually going to work. This is going to happen. Mark my words, this is just a matter of time,” he said.

Despite its name, “Full Self-Driving” can’t drive itself, and the company says human drivers must be ready to intervene at all times. Tesla’s “Full Self-Driving” hardware went on sale late in 2015, and Musk has used the name ever since as the company gathered data to teach its computers how to drive.

In 2019, Musk promised a fleet of autonomous robotaxis by 2020, and he said in early 2022 that the cars would be autonomous that year. In April of last year, Musk said the system should be ready in 2023.

Since 2021, Tesla has been beta-testing “Full Self-Driving” using volunteer owners. U.S. safety regulators last year made Tesla recall the software after finding that the system misbehaved around intersections and could violate traffic laws.

Musk also said the company is making huge progress on its Optimus humanoid robot. Currently it has two working at its factory in Fremont, California, that take battery cells off a production line and put them in shipping containers, he said.

Despite laying off the team working on Tesla’s Supercharger electric vehicle charging network, Musk said he thinks the company will deploy more chargers this year “that are actually working” than the rest of the industry. In the second half of the year, he expects to spend $500 million on Superchargers, Musk said.

____

Hamilton reported from San Francisco.

National News

FILE - Philadelphia Mayor Cherelle Parker speaks at at Philadelphia International Airport, Feb. 16,...

Associated Press

Thousands of Philadelphia city workers are back in the office full time after judge rejects lawsuit

Thousands of Philadelphia city employees are back in their offices full time after a judge rejected a union’s request to block Mayor Cherelle Parker’s requirement that they return. District Council 47 of the American Federation of State, County and Municipal Employees had sued the city, claiming the mandate violates its contract and would harm city […]

1 hour ago

Binaifer Nowrojee, the president of the Open Society Foundations, poses for a portrait in her organ...

Associated Press

Soros’ Open Society Foundations say their restructuring is complete and pledge $400M for green jobs

NEW YORK (AP) — Open Society Foundations, the philanthropic organizations that billionaire investor George Soros has built up since the 1970s, revealed its first new major commitment on Tuesday after a years-long internal reorganization, pledging $400 million over eight years to support green economic development. In some of her first public remarks since she was […]

2 hours ago

FILE - People shop at Taikoo Li Sanlitun shopping center in Beijing, China, on July 2, 2024. On Tue...

Associated Press

IMF’s economic view: Brighter outlook for China and India but tepid global growth

WASHINGTON (AP) — The International Monetary Fund is upgrading its economic outlook this year for China, India and Europe while modestly lowering expectations for the United States and Japan. But it says worldwide progress against accelerating prices has been slowed by stickier-than-expected inflation for services, from airline travel to restaurant meals. Overall, the IMF said […]

2 hours ago

FILE - A holiday sale sign is displayed at a retail store in Rosemont, Ill., June 25, 2024. On Tues...

Associated Press

Retail sales unchanged in June from May as inflation moderates

NEW YORK (AP) — Shoppers paused their spending June from May as they wrestle with moderating inflation but still high interest rates that have made buying anything on credit more expensive. Retail sales were unchanged in June from May, which was better than economists expected, after being revised at up 0.3% in May, according to […]

2 hours ago

Republican presidential candidate former President Donald Trump arrives on the first day of the Rep...

Associated Press

2024 Election Latest: With Trump as its official presidential nominee, RNC enters second day

The Republican National Convention heads into its second day — now with Donald Trump officially as its presidential nominee. Trump energized the crowd Monday night by entering the arena with a bandage on his right ear after being injured during an assassination attempt Saturday. Expect more speakers Tuesday to mention what they described as the […]

3 hours ago

President Joe Biden speaks with reporters at Andrews Air Force Base, Md., Monday, July 15, 2024. as...

Associated Press

The Democratic National Committee says it’s investing $15 million in 7 swing state parties

WASHINGTON (AP) — Democrats are trying to offer political counterprograming to the Republican National Convention in Milwaukee, announcing $15 million to fund campaign operations in seven key swing states — even as some in the party have urged President Joe Biden to bow out of November’s election. The Democratic National Committee announced Tuesday that it […]

4 hours ago

Elon Musk wins back his $44.9 billion Tesla pay package in shareholder vote