Musk's sky-high salary plan is approved! Will Tesla's registered address be moved to Texas? Tesla | Musk | Salary

Tesla's executive compensation package, which is considered the highest in U.S. history, was approved by shareholders.

According to the voting results announced by Tesla, Tesla shareholders approved the nearly $56 billion compensation plan of the company's CEO Elon Musk and supported Tesla's move of registered address from Delaware to Texas.

However, the lawsuit previously filed by shareholders against the compensation plan has not been dismissed, and the judge may still question the latest voting results.

On June 14th local time, Tesla held its 2024 Annual Shareholders Meeting at its headquarters in Texas, USA, and announced five proposals passed by shareholders in the latest vote.

The most closely watched decision was the approval of a nearly $56 billion pay package for Musk.

Public information shows that in 2018, Tesla's board of directors approved Musk's sky-high compensation plan with 73% of the votes in favor. The plan lasts for 10 years and includes 12 sets of market value and operating goals. If Musk can achieve all the goals, he will receive a total of 12% of Tesla's stock options as a reward, with a total value of approximately US$56 billion.

Shareholders’ approval of the pay package was seen as both a recognition of Musk’s tenure and a reflection of the fact that investors do not want to risk the company’s future.

After all, in January this year, Musk "threatened" the company that if he failed to obtain sufficient voting control, he would rather build products outside of Tesla, with the aim of getting the compensation plan approved.

Second, shareholders also approved a proposal to move the company's legal address from Delaware to Texas.

In January, a Delaware judge, Kathryn McCormick, struck down Musk's pay package in a lawsuit, saying it was "granted by a board with close personal and financial ties to executives."

After the ruling was announced, Musk said on the X platform that day: "Never register a company in Delaware." He also expressed his desire to register a company in Texas.

Musk posted that both proposals were passed with a "significant advantage" and he was very grateful for the support of shareholders.

Shareholders also approved other proposals, including the re-election of two board members: Kimbal Musk, brother of Elon Musk, and James Murdoch, son of media mogul Rupert Murdoch.

The industry has different opinions on Musk's sky-high salary package.

One group said that “a deal is a deal” and that Musk should be rewarded for achieving his ambitious goals in terms of market value, revenue and profitability, and that the shareholders’ decision confirmed this.

However, some of Tesla's major shareholders said the compensation plan was "excessive". The California Public Employees' Retirement System, which holds about 9.5 million Tesla shares, said the plan did not match the company's actual performance. Glass Lewis & Co., a well-known shareholder advisory firm, also believed that the plan was "too large" and could harm the interests of other shareholders.

Judge McCormick had noted that the pay package would make Musk 250 times more than the average salary of his peers.

At the same time, even shareholder approval does not mean that the lawsuits related to the compensation plan can be written off. In other words, this "battle for $56 billion" is not over yet.

McCormick is likely to make a new ruling on whether the latest vote complies with the state's business laws. Some legal experts believe that the lawsuit may continue for several more months.

McCormick ruled that the board of directors had "serious flaws" in approving Musk's compensation plan. The main reason for this is that Tesla's board of directors is composed of many people who have close ties with Musk, and Musk's "star CEO" effect has affected the subjective judgment of the board members.

Musk could also face new lawsuits. Last week, another Tesla shareholder filed a new lawsuit, arguing that the second round of votes on the compensation plan should be ruled invalid.

At the shareholders' meeting, Musk said that Tesla has produced more than 6 million electric vehicles in total, and the total production is expected to exceed 7 million by the end of the year.

In August this year, Tesla will also launch an innovative Robotaxi business, realizing a combination model similar to Uber and Airbnb - Tesla owns a part of the fleet, and customer vehicles can also join the operation queue to earn profits.

However, Musk has recently shifted the focus of Tesla's business to self-driving taxis, putting aside more affordable mass-market electric vehicles, which has caused concerns among some investors, who believe that this makes it difficult for Tesla's self-driving technology to be perfected.

In addition, Tesla's supercharging network is expanding at an accelerated pace. In the second half of this year, the investment in the deployment of the supercharging network is expected to reach US$500 million.

Tesla's stock price has fallen by about 27% this year amid a slowing electric vehicle market, but as the shareholder meeting was held, Tesla's stock price rose 2.92% as of Thursday's close and rose another 0.48% after hours.

At the conference, Musk expressed his opinion that humanoid robots will enter people's lives. They can be a good assistant at home and can also perform various jobs in factories.

Observers point out that Musk's attention has been distracted by artificial intelligence and robots compared to the electric car market. After all, Musk says that almost all of Tesla's long-term value will come from the above two studies.

Musk has added two more companies to his portfolio since his compensation package was approved by the board in 2018. He currently runs or owns six companies, including SpaceX, social media giant X, brain-computer interface company Neuralink, and artificial intelligence startup xAI.