Elon Musk, the founder and CEO of Tesla Inc., secured a victory after shareholders approved two significant resolutions during the annual general meeting on Thursday, including his contentious $56 billion pay package, which had been nullified by a Delaware judge earlier this year.
Additionally, shareholders of the luxury electric car manufacturer approved the relocation of its incorporation to Texas, where its largest U.S. factory is located. Tesla is now officially a Texas corporation.
Following the announcement, Tesla shares surged by approximately 3%, closing at $182.47 on Thursday.
After the preliminary outcomes were shared at the Tesla shareholder meeting, Musk expressed his gratitude, saying, "I love you guys."
The annual meeting included final votes on several proxy proposals, alongside the pay package and the corporate move to Texas. Prior to the meeting, Musk had expressed his appreciation to voting shareholders on his social media platform, X, noting that both Tesla resolutions were passing by substantial margins, which subsequently led to a significant increase in Tesla shares.
In a statement, Tesla confirmed that the stockholders ratified the 2018 CEO Performance Award and the redomestication to Texas. The company has completed all necessary filings to transition into a Texas corporation.
The proposals also included the election of two Class II directors, James Murdoch and Kimbal Musk, for a term of three years, or until their successors are duly elected and qualified. Additionally, a proposal to approve executive compensation on a non-binding advisory basis was passed, as well as the ratification of PricewaterhouseCoopers LLP as Tesla's independent registered public accounting firm for the fiscal year 2024.
Tesla will file a Form 8-K with the Securities and Exchange Commission to disclose the vote tabulations certified by its election inspector.
Musk's Tesla compensation package, recognized as the largest in U.S. corporate history, was initially approved by shareholders in 2018. However, it underwent intense scrutiny and was voided in January by Chancellor Kathaleen McCormick, who deemed it deeply flawed due to Musk's significant influence over the Board.
Tesla shareholders were divided on the pay package, with some viewing Musk as essential to the company's future success, while others criticized the compensation as exorbitant and against the best interests of the company.
The resolution to transfer its state of incorporation to Texas from Delaware followed strong support from Musk's followers on X after the Delaware judge's decision. Musk had responded to the ruling by advising, "Never incorporate your company in the state of Delaware. I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters."
In 2021, Tesla relocated its corporate offices from Palo Alto, California, to Austin, Texas, citing issues with California regulations and disputes with health officials over the reopening of the Fremont facility during the pandemic.
These recent developments occur as Tesla faces challenges with weak demand and stiff competition in the U.S., Europe, and its crucial market in China.
