In 2018, a series of Tesla performance targets regarding share price and revenue goals were created for Elon Musk, with every target giving Musk the option to purchase Tesla Shares at $23 a share. In 2024, many of these performance targets have been achieved, which if undisrupted would allow Musk to purchase 303 million shares at a steeply discounted price. This would grant Musk $56 billion of profit in the form of Tesla shares, although he would be unable to sell any of the $56 billion until after 5 years.
This compensation plan, obviously massive, was found to be “unfathomable” by a Delaware court that tried to block it, but a recent vote by shareholders seems to have confirmed shareholder support for the massive compensation package, with 72% of votes cast excluding Musk and brother supporting the measure. Another concurrent vote was for the reincorporation of Tesla away from Delaware and into Texas, a more management friendly state in Musk’s view that aligns with his values.
Despite major retail investor support and institutional support from companies like Vanguard and BlackRock, there was some outspoken opposition like the California State Teachers’ Retirement and Norway’s Sovereign Wealth Fund.
While the shareholder vote is a Musk victory, it is a small piece of the puzzle as the compensation package has not been reinstated. Rather, the vote is a piece of evidence that the compensation package is supported by shareholders. Additionally, it is a confirmation that Tesla investors are still happy with Musk, even if he is distracted with other endeavors when Tesla faces difficulties in the EV market.