Elon Musk’s Optimism on $56 Billion Pay Vote Sends Tesla Shares Up

Tesla’s stock saw a boost in pre-market trading following Elon Musk’s statement that shareholders are likely to approve his $56 billion disputed package and his proposal to relocate the EV maker’s incorporation to Texas.

In the early hours of this morning, Tesla shares were up almost 7% in pre-market trading, and as of 10:45 a.m. ET, they were up by around 3%.

Ahead of Tesla’s annual meeting today, shareholders are set to vote on two resolutions. One of these resolutions involves reconsidering a $56 billion compensation package originally approved by shareholders in 2018, which was subsequently invalidated by a Delaware judge at the start of this year.

Another item under consideration is Tesla’s potential relocation of its incorporation from Delaware to Texas. This proposal gained traction after Elon Musk polled his social media followers on X earlier this year, where he received overwhelming support for the move.

Musk has indicated that, at present, both resolutions are seeing strong support by “wide margins.” However, he did not provide specific details on the margins of approval.

Both Tesla shareholder resolutions are currently passing by wide margins!

♥️♥️ Thanks for your support!! ♥️♥️ pic.twitter.com/udf56VGQdo

— Elon Musk (@elonmusk) June 13, 2024

Since its inception, the initial pay package set ambitious goals for Tesla’s financial performance and market value. While the company has grown into one of the biggest electric automakers globally, a lot has evolved over the years.

With the EV maker facing the challenges of slowing expansion and heightened competition, particularly from Chinese rivals, it has navigated significant developments. During this period, Elon Musk acquired Twitter, now known as X, and ramped up efforts across diverse endeavors, which involves his brain-computer interface venture Neuralink and artificial intelligence firm xAI.

Critics of the compensation package dispute that Musk’s attention is divided by his other ventures. They claim that the deal, which stands as the largest in U.S. corporate history, is overly generous. They also point to Tesla’s recent financial performance as falling short of expectations.

The compensation package has faced opposition from several prominent shareholders and highly ranked proxy advisors, including Institutional Shareholder Services and Glass Lewis. The California State Teachers’ Retirement System, a significant pension fund, has also shown resistance due to its perceived excessive amount. Similarly, Norway’s sovereign wealth fund has expressed opposition to the package.