Musk has lost his appetite for cutting electric vehicle costs. If you think he will lead Tesla to sell huge numbers of robotaxis and humanoid robots, buy the stock.
Does this vote mean Musk gets the extra $45 billion in Tesla stock options so he can top out his net worth at $200 billion? What does this shareholder vote mean for people who own Tesla stock?
The short answer to these questions is: “No and possibly nothing.” How so?
The Delaware ruling that struck down Musk’s pay package still stands and more litigation is likely ahead, noted the Times.
Tesla’s stock has fallen due to the company’s disappointing performance and prospects. This vote does not change Musk’s relatively uncompelling strategy to boost growth, about which I wrote in an April Forbes post. Tesla’s Shareholder Vote On Musk’s Pay
On June 13, Tesla shareholders “reaffirmed a pay award of more than $45 billion” for Musk at Tesla’s annual meeting in Austin, Tex., noted the Times.
Tesla’s board had called for the vote following the January 2024 ruling by a judge in Delaware — where Tesla is registered — striking down Musk’s 2018 pay package. The package gave Musk “stock options worth tens of billions of dollars if he hit demanding revenue or profit benchmarks and increased the company’s stock value to $650 billion,” noted the Times.
Tesla’s business improved after the 2018 approval of Musk’s pay package. That year Tesla was scrambling to produce its lower-priced Model 3 sedan. Tesla’s business grew rapidly soon after the approval. The company’s market capitalization topped the package’s $650 billion target long enough for Musk to collect his options, the Times reported. .
At the start of 2024, Chancellor Kathaleen St. J. McCormick of the Court of Chancery in Delaware, “agreed with a group of disenchanted Tesla shareholders who contended in a lawsuit that the 2018 pay package was wildly excessive,” the Journal wrote.
McCormick ruled the 2018 pact was “tainted by the board’s failure to disclose conflicts of interest stemming from their personal and financial ties to Musk,” according the Journal.
