(Bloomberg) — Elon Musk said late Wednesday in the US that two key proposals to re-ratify his pay package and move Tesla Inc.’s legal home to Texas from Delaware are currently passing by “wide margins.”
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The preliminary results are great news for Musk and for Tesla, which has been rallying support for both measures for weeks among large institutional investors and the company’s army of retail shareholders. The electric car maker set a deadline for investors of 10:59 p.m. central time June 12 for votes, a day before the annual shareholder meeting.
Tesla’s annual meeting is on June 13 at the company’s headquarters in Austin. Proposal 3 would make Texas the company’s legal home, while Proposal 4 asks investors to re-ratify the same $56 billion compensation package for Chief Executive Officer Musk that was voided by a Delaware judge earlier this year.
The hotly contested pay package passed in 2018 but was struck down in January by a judge in Delaware, who said investors weren’t fully informed of key details. Under the plan, Musk is eligible for as much as $55.8 billion in stock options if Tesla hit certain milestones, which the company has reached.
“This doesn’t fully settle the matter; the compensation package can still be deemed illegal,” analyst Alexander Potter of Piper Sandler wrote in a note to clients late Wednesday. “But a Delaware judge previously struck down the package citing limited shareholder disclosure, and given enhanced disclosures preceding this vote, it’s unclear why anyone would take issue with this newly-ratified deal.”
“We expect the stock to respond favorably to this news, though the upside is perhaps unlikely to be as violent as the downside would have been, had shareholders rejected the deal,” Potter said.
Those in support include Scottish asset manager Baillie Gifford & Co., Cathie Wood’s Ark Investment Management LLC and Ron Baron, who runs Baron Funds.
Baron, a longtime Tesla investor, said in an open letter backing Musk’s package that the will of the shareholders who voted in 2018 should be favored. Without Musk, there would “be no Tesla,” and this vote might determine whether he stays at the company, he said.
Those against include Norway’s sovereign wealth fund, Norges Bank, and California Public Employees’ Retirement System.
Tesla Chair Robyn Denholm has been engaging with large institutional investors and Tesla has posted several ads on X, which Musk owns. In the final days of the campaign, several Tesla engineers and current and former executives posted on X in support of Musk’s leadership.
The shareholder meeting will be livestreamed Thursday starting at 4:30 p.m. New York time.
(Updates with analyst comment in 5th paragraph.)
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