Tesla shareholders voted on Thursday to reinstate CEO Elon Musk's record $44.9 billion compensation package that was rejected by a Delaware judge earlier this year, expressing a strong vote of confidence in his leadership of the electric car maker, UNN reports citing AP.
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Earlier on Thursday, Tesla announced that shareholders had voted overwhelmingly in favor of Musk's remuneration package. This led to a 3% increase in the company's shares by the time the markets closed. After the announcement of the voting results, Musk began to tell shareholders about new developments in the company.
A vote in favor does not necessarily mean that Musk will receive compensation for all shares in the near future. The issue is likely to be "stuck" in the Delaware Court of Chancery and the Supreme Court for several months as Tesla tries to overturn the Delaware judge's decision.
This year, Musk expressed doubts about his future at Tesla, writing on the social network X that he wanted to get a 25% stake in the company so that he would not be involved in the development of artificial intelligence elsewhere. He said that a larger share is needed to control the use of AI.
Tesla is also struggling with falling sales and profits as demand for electric vehicles slows globally.
But at the company's annual meeting on Thursday in Austin, Texas, Musk assured shareholders that he would stay on, telling them he would not be able to sell a single share of his compensation package for five years.
"It's not really cash, and I can't run away, and I don't want to," he said.
The results of the vote on Musk's compensation package were not immediately announced, but the company said that shareholders voted in favor of Musk's compensation plan, which was originally approved by the board of directors and shareholders six years ago.
Tesla last estimated its compensation package at $44.9 billion in an April regulatory filing. It once amounted to as much as $56 billion, but it has decreased along with the decline in Tesla shares, which have fallen by about 25% this year.
Tesla said it would appeal the January court decision, but asked shareholders to re-approve the package at its annual meeting on Thursday.
In a separate vote, the board approved the relocation of the company's legal department to Texas to avoid litigation in Delaware, where Tesla is registered as a corporation.
"This is incredible," a triumphant Musk told the crowd gathered at Tesla's headquarters and large factory in Austin, Texas. - "I think we're not just opening a new chapter for Tesla, we're starting a new book.
Musk and Tesla did not win everything. Shareholders approved measures that reduced the term of office of board members from three years to one and reduced the required number of votes for shareholder proposals to a simple majority.
Legal experts say that the issue of Musk's remuneration package will continue to be resolved in Delaware, largely because Musk's lawyers have assured that they will not try to move the case to Texas.
But they disagree on whether the new ratification of the remuneration package will make it easier for Tesla to get it approved.
If the decision stands, Musk is likely to appeal to the Delaware Supreme Court, said John Lawrence, a Dallas-based lawyer at Baker Botts who defends corporations against shareholder lawsuits.