(Bloomberg) — Elon Musk said late Wednesday in the U.S. that two key proposals to reratify his wage plan and move Tesla Inc.’s legal headquarters to Texas from Delaware are currently being passed by “wide margins.” .
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The preliminary results are great news for Musk and for Tesla, which for weeks has been rallying support for both measures among large institutional investors and the company’s army of retail shareholders. The electric car maker has set a voting deadline for investors of June 12 at 10:59 p.m. Central time, one day before the annual shareholder meeting.
Tesla’s annual meeting will take place on June 13 at the company’s headquarters in Austin. Proposition 3 would make Texas the company’s legal headquarters, while Proposition 4 asks investors to reratify the same $56 billion compensation package for CEO Musk that was struck down by a Delaware judge more early this year.
The hotly contested pay package was passed in 2018 but was struck down in January by a Delaware judge, who said investors were not fully informed of key details. Under the plan, Musk is eligible for up to $55.8 billion in stock options if Tesla hits certain milestones, which the company has achieved.
“This doesn’t completely solve the problem; the compensation program may still be considered illegal,” Piper Sandler analyst Alexander Potter wrote in a note to clients Wednesday evening. “But a Delaware judge had already rejected the deal citing limited disclosure to shareholders, and given the improved disclosures prior to this vote, it is unclear why anyone would challenge this newly ratified deal.”
“We expect the stock to react favorably to this news, although the rise is unlikely to be as sharp as the fall would have been had shareholders rejected the deal,” Potter said.
Backers include Scottish asset manager Baillie Gifford & Co., Cathie Wood’s Ark Investment Management LLC and Ron Baron, who runs Baron Funds.
Baron, a longtime Tesla investor, said in an open letter supporting Musk’s package that the will of shareholders who voted in 2018 should be favored. Without Musk, there would be “no Tesla” and this vote could determine whether he stays with the company, he said.
Those against it include Norway’s sovereign wealth fund, Norges Bank, and the California Public Employees’ Retirement System.
Tesla President Robyn Denholm has engaged with large institutional investors and Tesla has released several ads on X, which Musk owns. In the final days of the campaign, several current and former Tesla engineers and executives posted on X in support of Musk’s leadership.
The shareholders’ meeting will be broadcast live on Thursday starting at 4:30 p.m. New York time.
(Updates with analyst comment in 5th paragraph.)
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