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Tesla shareholders approval Musk’s £44bn pay package but reject ESG proposals

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TMT Reporter

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This shift in advertiser loyalty comes as X, under Musk’s leadership, has declared "war" on marketers who have boycotted the site.
This shift in advertiser loyalty comes as X, under Musk’s leadership, has declared "war" on marketers who have boycotted the site.

Tesla chief Elon Musk has won shareholder approval over his controversial 2018 stock option compensation package, potentially worth up to $56bn (£44bn), at Tesla’s annual meeting held at its Texas gigafactory.

Shareholders also greenlit Tesla’s decision to re-incorporate in Texas, moving away from Delaware, where Musk’s pay package had previously been rescinded.

“Hot damn, I love you guys,” said the billionaire entrepreneur on Thursday, adding, “I think we’re not just opening a new chapter for Tesla, we’re starting a new book.”

Despite the approval, the payout is not guaranteed. Delaware judge Kathaleen McCormick, who voided the package earlier this year following a lawsuit by shareholder Richard Tornetta, still has the final say.

The lawsuit, filed in 2019, argued that Musk’s compensation was excessive and unfair, especially given his divided attention across multiple companies. McCormick ruled that shareholders were not adequately informed of Musk’s influence over the pay package’s creation, branding the “unfathomable sum” as unjust.

In a bid to avoid further legal obstacles, Tesla pushed for re-incorporation in Texas, where the company expects a more favourable outcome. Musk made the decision after conducting a poll on X, which he also owns, asking followers whether Tesla should re-incorporate in Texas.

The chief executive of retail activist shareholder platform Tulipshare, Antoine Argouges, said he is “deeply concerned” about Tesla’s approval of Musk’s compensation package, calling it a “shortsighted” decision and “one that will have detrimental consequences for Tesla’s future.”

Shareholders voted down several of Tulipshare’s proposals aimed at improving Tesla’s ESG standards, including around anti-harassment efforts, collective bargaining and tying executive pay to sustainability metrics.

Argouges said: “Although Tulipshare did not secure majority shareholder support for our proposal to link CEO Elon Musk’s pay package to the company’s environmental, social, and governance (ESG) performance, we remain committed to our engagement with Tesla.”

Tesla stock has slipped 29 per cent over the past year due to waning demand for its electric cars.

Morning Wire has approached Tesla for comment.