(Reuters) -Tesla shareholders are voting to approve a $56 billion pay package for Elon Musk and to move the electric vehicle maker’s legal home to Texas, Musk said on social media platform X on Wednesday, adding that passage was by wide margins.
Shareholders of the electric-car maker are voting on a proposal to ratify CEO Musk’s 2018 incentive package, valued at up to $56 billion at the time and the largest in U.S. corporate history, after a Delaware judge voided the plan approved by its board “beholden” to Musk.
The result will be announced at a meeting on Thursday.
A person familiar with the preliminary tally confirmed Musk’s post, and said that a combination of big institutional investors and retail investor got the ‘yes’ result over the line.
Shareholders, however, are allowed to change their vote up to the start of the annual meeting.
Tesla shareholders also cast ballots on other proposals including the move of Tesla’s legal headquarters from Delaware to Texas, as well as the re-election of two board members: Musk’s brother Kimbal Musk and James Murdoch.
Musk referred to the resolutions on his pay package and the move in his tweet, thanking shareholders for their support.
Some investors viewed the vote on Musk’s pay as a test of confidence in his leadership. While he is undoubtedly Tesla’s driving force, and is credited with much of its success, the company has recently seen slowing sales and profits.
The board said the world’s richest person deserves the package, because he hit all the ambitious targets on market value, revenue and profitability.
The pay package is also needed to keep Musk devoted to Tesla, the board said, even though the Delaware judge said the 2018 pay plan failed to make sure that Musk committed a substantial amount of time to Tesla.
Musk has threatened to build AI and robotics products outside Tesla, if he fails to gain enough voting control, which requires the 2018 pay package to be approved.
Some large shareholders including Norway’s sovereign wealth fund and California’s two largest pension funds have said they will vote against the compensation, saying the pay is excessive.
Tesla has been drumming up support for Musk’s pay package, especially from retail investors, who make up an unusually high percentage of its ownership base but who often do not vote.
Company executives have posted messages on X, saying Musk is critical to Tesla’s success. Tesla has run social media ads, and Musk has promised a personal tour of Tesla’s factory in Texas to some shareholders who cast votes.
COURT BATTLE
The same package was previously rejected by a Delaware judge who invalidated it as an “unfathomable sum” granted by a conflicted board with close personal and financial ties to its top executive.
The board held the shareholder vote as a way to bolster its appeal of the ruling, in which the judge cited the board’s failure to fully inform shareholders before approving the pay package in 2018.
Musk has to wait months or years to get his pay package restored as appeals wind their way up to Delaware’s Supreme Court.
Tesla could also face more litigation from some shareholders. One of them this month filed a lawsuit challenging the upcoming shareholder vote on Musk’s pay package and the change of domicile.
(Reporting by and Hyunjoo Jin in San Francisco, Greg Roumeliotis in New York and Abinaya Vijayaraghavan in Bengaluru; Editing by Nivedita Bhattacharjee and Miral Fahmy)
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