DETROIT (AP) — If Tesla shareholders vote Thursday against reinstating Elon Musk’s $44.9 billion salary, the CEO could make good on his threats to move artificial intelligence research to one of these other companies. Or he might even go away.
If they approve the all-stock compensation plan which was thrown out by a Delaware judge in Januarythat would almost guarantee he would stay at the company where he has become the world’s leader in electric vehicles, moving toward AI and robotics, including autonomous vehicles, which Musk says are the future of You’re here.
But even with reapproval at Thursday’s annual shareholder meeting, which is likely according to many analysts, there would be uncertainty. Musk threatened on X, his social media platform, to develop AI elsewhere if he does not get a 25% stake in Tesla (he currently owns about 13%). Musk’s xAI recently received $6 billion in funding develop artificial intelligence.
Wedbush analyst Dan Ives said he expects the package to be reapproved overwhelmingly, ending a lot of uncertainty with Musk. “This issue has built up overhang on Tesla stock, and it will be important to put this distraction in the rearview mirror,” Ives wrote in a note to investors.
Shares of Tesla Inc. have fallen more than 30% this year, with the company warning of “significantly weaker” sales growth this year.
The related issue of moving the electric vehicle maker’s legal domicile from Delaware to Texas is also up for shareholder vote.
This move aims to escape oversight from the Delaware court and possibly a decision by Chancellor Kathaleen St. Jude McCormick which invalidated Musk’s salary package. In a January opinion on a shareholder lawsuit, the judge determined that Musk controlled Tesla’s board and was not entitled to the historic package worth nearly $56 billion.
Many institutional investors have spoken out against the large payout, with some citing declining vehicle sales, price cuts and falling Tesla stock price. But Tesla’s five largest institutional shareholders, Vanguard, BlackRock, State Street, Geode Capital and Capital Research, said they would not announce their votes or comment. They control about 17% of the votes.
Erik Gordon, a professor of business and law at the University of Michigan, said individual shareholders would likely vote in favor of the package and that they own more than half of Tesla’s shares.
One of the investors that has spoken out against the plan is the Norwegian sovereign wealth fund managed by Norges Bank Investment Management. He said last weekend that he would vote no on Thursday.
“While we appreciate the significant value generated under Mr. Musk’s leadership since the grant date in 2018, we remain concerned about the total award amount, the structure considering the performance triggers, the dilution and the lack of key person risk mitigation,” Norges said. said Bank Investment Management in a prepared statement.
In May, two major shareholder advisory firms, ISS and Glass Lewis, recommends voting against the package.
But Tesla and Musk unleashed a furious lobbying effort to get the package approved, in posts on X, television appearances and in proxy filings with the U.S. Securities and Exchange Commission.
“There are only 2 days left to protect and help increase the value of your investment in $TSLA by voting FOR ratification of the 2018 CEO Performance Award,” Tesla posted on X Tuesday morning.
Tesla Chairman Robyn Denholm wrote in a letter to shareholders that the project was approved by 73% of the vote six years ago. “Because the Delaware court questioned your decision, Elon has not been paid for any of his work for Tesla over the past six years, which has helped generate significant growth and shareholder value. This seems to us – and to the many shareholders we have already heard from – as fundamentally unfair and inconsistent with the will of the shareholders who voted for it,” she wrote.
Tesla said the 2018 award spurred Musk to create more than $735 billion in shareholder value in the six years since it was approved.
