Tesla shareholders overwhelmingly supported proposals to confirm Elon Musk’s multibillion-dollar pay package, according to voting details released Friday.
Approval of the proposals was announced at Tesla’s annual shareholder meeting on Thursday, without the underlying totals. In the end, about 72 percent of voting shares supported the pay package, excluding shares held by Mr. Musk and his brother, Kimball.
For months, many Tesla investors have worried about how committed Elon Musk would be to running the electric car company after a Delaware judge struck down his pay package.
The compensation plan requires Mr. Musk to hold the shares for at least five years before selling them, and the value of the stake will continue to fluctuate before he can do so. At Thursday’s closing price, the stock is worth about $48 billion.
Addressing shareholders after the vote, Mr Musk vowed he was committed to Tesla. The pay package, he said, “isn’t really cash and I can’t cut and run, nor would I want to.”
After gaining nearly 3 percent on Thursday, Tesla shares continued to rise on Friday, rising about 1 percent in early trading, extending gains made after Mr. Musk said the pay vote was going to be approved, before they were announced the official results. Legions of Mr. Musk’s supporters online celebrated the vote and analysts revised their reports on Tesla’s prospects.
It served as a “vote of confidence in Elon,” Bernstein analysts wrote in a post-result note. “While there is still some uncertainty about the legal process and next steps, by this standard the vote was a clear pass, allaying concerns that Elon might leave the company or direct more of his energy elsewhere.”
Tesla’s board had hoped that a second confirmation of the fee, which was originally approved in 2018, could persuade the Delaware court to overturn its decision. The judge in the case said the award was excessive and dictated by Mr Musk to a board with personal ties to him.
With the pay package, Mr Musk would own 20.5% of Tesla, up from about 13%. Mr Musk said he would like a 25% stake, noting in January that it would be “enough to have influence, but not so much that I can’t topple myself”. If he didn’t get such a big stake, he said, “he would rather be making products outside of Tesla.”
Even after rallying this week, Tesla’s stock is down more than 20 percent this year, compared with a 14 percent gain in the broader stock market. The company remains the most valuable car company by some distance, at nearly $600 billion, but fears of stiffer competition and significant demand for its models have weighed on the stock.
At Thursday’s shareholder meeting, Mr. Musk was characteristically positive about Tesla’s self-driving technology, including a promising fleet of robot taxis, and said the company’s humanoid robot, called Optimus, would grow into a multi-trillion-dollar business of its own. .
Market analysts are split on where Tesla goes from here, with about 40 percent rating the stock a “buy,” 20 percent a “sell” and the rest a “hold,” according to FactSet. The range of price predictions is wide and averages out to about where the stock is trading now.
Bernstein’s price target implies a downside of 30 percent, and analysts rate the stock as “underperform.” Others are more optimistic: Wedbush analysts think the stock could rise 50 percent from here, rating it an “outperform.” The result of the pay vote was a “champagne moment,” they wrote. “Tesla is Musk and Musk is Tesla.”
Peter Eavis and Jack Ewing contributed to the report.
