Tesla shareholders decisively backed proposals to firm up Elon Musk's multibillion-dollar pay package, according to Voting details released Friday..
Approval of the proposals was announced at Tesla's annual shareholder meeting on Thursday, without underlying totals. In the end, about 72 percent of voting shares backed the pay package, excluding shares owned by Musk and his brother, Kimbal.
For months, many Tesla investors have worried about the level of involvement Elon Musk would have in running the electric car company, after a Delaware judge annulled his pay package.
The compensation plan requires Musk to hold 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, Musk promised that he was committed to Tesla. The salary package, he said, “isn't really cash, and I can't run away, nor would I want to.”
After gaining nearly 3 percent on Thursday, Tesla shares continued to rise on Friday, up about 1 percent in premarket trading, extending gains made after Musk said the pay vote was ready for be approved, before the official results were announced. Musk's legions of online supporters celebrated the vote and analysts revised their reports on Tesla's prospects.
It served as a “vote of confidence in Elon,” Bernstein analysts 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, alleviating concerns that Elon could leave the company or direct more energy elsewhere.”
Tesla's board hoped that a second confirmation of the wage award, originally approved in 2018, could convince the Delaware court to reverse its ruling. The judge in the case said the compensation was excessive and had been awarded by Musk to a board that had personal ties to him.
With the pay package, Musk would own 20.5 percent of Tesla, up from about 13 percent. Musk has said he would like to take a 25 percent stake, noting in January that it would be “enough to be influential, but not so much that he can't be ousted.” If he didn't get such a big stake, he said, “I'd rather build products outside of Tesla.”
Even after this week's rise, Tesla shares are down more than 20 percent this year, versus a 14 percent gain in the broader stock market. The company remains by far the most valuable car company, worth nearly $600 billion, but fears of tougher competition and declining demand for its models have weighed on the stock.
At Thursday's shareholder meeting, Musk was typically upbeat about Tesla's self-driving technology, including a promised fleet of robotaxis, and said the company's humanoid robot, called Optimus, would become a multibillion-dollar business of its own.
Market analysts are divided on where Tesla goes from here: About 40 percent rate 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 roughly the level at which the stock is currently trading.
Bernstein's price target implies a 30 percent drop, and analysts rate the stock as “underperform.” Others are more optimistic: Wedbush analysts believe the stock could rise 50 percent from here, calling it “outperform.” The outcome of the wage vote was a “pop-the-champagne moment,” they wrote. “Tesla is Musk and Musk is Tesla.”
Peter Eavis and Jack Ewing contributed reports.
