Musk’s Tesla Pay Package Got Big Margin in Shareholder Vote

Tesla shareholders decisively backed proposals to affirm Elon Musk’s multibillion-dollar pay package, according to details of the vote released on Friday.

Passage of the proposals was announced at Tesla’s annual shareholder meeting on Thursday, without the underlying totals. In the end, about 72 percent of voting shares backed the pay package, excluding stock owned by Mr. Musk and his brother, Kimbal.

For months, many Tesla investors have worried about how engaged Elon Musk would be in running the electric car company, after a judge in Delaware voided his pay package.

The compensation plan requires Mr. Musk to hold on to the shares for at least five years before selling them, and the value of the package will continue to fluctuate before he can do so. At Thursday’s closing price, the shares are worth about $48 billion.

Addressing shareholders after the vote, Mr. Musk vowed that he was committed to Tesla. The pay package, he said, “is not actually cash, and I can’t cut and run, nor would I want to.”

Tesla’s stock fell about 2 percent in early trading on Friday, reversing some of gains made the day before, when Mr. Musk said that the pay vote was set to be approved before the official results were announced. Mr. Musk’s legions of supporters online celebrated the vote and analysts revised their reports on Tesla’s prospects.

It served as a “vote of confidence in Elon,” analysts at Bernstein wrote in a note after the result. “While there remains some uncertainty around the legal process and next steps, by that standard the vote was a clear pass, mitigating concerns that Elon might leave the company or direct more of his energy elsewhere.”

Tesla’s board hoped that a second confirmation of the pay award, originally approved in 2018, could convince the Delaware court to reverse its ruling. The judge in the case said that the award was excessive and dictated by Mr. Musk to a board with personal ties to him.

“We believe that the ratification vote that Elon demanded and coerced is deeply flawed as a matter of law, legally ineffective and does not impact our case,” Greg Varallo, a lawyer for the disenchanted Tesla shareholders who challenged Musk’s pay in court, said in a statement.

With the pay package, Mr. Musk would own 20.5 percent of Tesla, up from about 13 percent. Mr. Musk has said he would like a 25 percent stake, noting in January that it would be “enough to be influential, but not so much that I can’t be overturned.” If he didn’t get a stake that large, he said, he would “prefer to build products outside of Tesla.”

Even after the rise this week, Tesla’s stock is down more than 20 percent this year, versus a 14 percent gain in the broader stock market. The company remains the most valuable car company by some distance, at nearly $600 billion, but fears of stiffer competition and flagging demand for its models have weighed on the stock.

At the shareholder meeting on Thursday, Mr. Musk was characteristically bullish on Tesla’s self-driving technology, including a promised fleet of robotaxis, and said that the company’s humanoid robot, called Optimus, would grow into a multitrillion-dollar business of its own.

Market analysts are split on where Tesla goes from here, with about 40 percent rating the stock a “buy,” 20 percent a “sell” and the rest a “hold,” according to FactSet. The range of price forecasts is wide, and averages out to roughly where the stock is trading now.

Bernstein’s price target implies a 30 percent decline, and the analysts rate the stock as “underperform.” Others are more upbeat: Analysts at Wedbush think the stock could rise 50 percent from here, rating it an “outperform. The result of the vote on pay was a “pop the champagne moment,” they wrote. “Tesla is Musk and Musk is Tesla.”

Peter Eavis, Jack Ewing and Michael J. de la Merced contributed reporting.

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