Tesla shareholders approve payment of 45 billion euros to Musk

Tesla shareholders have approved remuneration for the company’s top manager Elon Musk in the amount of approximately $48.4 billion (45 billion euros), which is equivalent to approximately 9.2% of the company’s market value. Musk’s compensation must now be ratified by a judge—most likely the Supreme Court—of Delaware, where the company is headquartered. The lack of precedent is a factor of uncertainty, as the company itself acknowledged in a statement released after the stock price was revealed, in which it explained that “we cannot predict how Musk’s compensation will be treated under Delaware law in these unprecedented circumstances “

The vote was due precisely to the fact that a court in Delaware, where Tesla’s headquarters is located, five months ago declared Musk’s compensation illegal. With this figure, Musk’s fortune, which was $207 billion (€193 billion) yesterday, could increase by 23.3%.

The denial came as Judge Katelyn McCornick of the commercial court in Delaware, a state where many large US companies are located close to a tax haven due to its tax regime, found that Tesla’s board of directors, which set the compensation package in 2018, had no real independence from Musk, whose official title at Tesla is “Techno King,” indicating the character’s ambitions. According to McCornick, Musk’s goals were extremely easy to achieve, which made the agreement invalid. The only compensation the manager receives from Tesla is the compensation package.

The top corporate governance body of the company, which is the world’s second-largest electric vehicle maker after China’s BYD, includes Musk’s brother Kimbal and his lawyer in three of his divorces, among others. Musk also owns 13% of Tesla, and with the shares he was granted today (and which the courts are expected to allow him to receive), his ownership will rise to 21%. However, the controversial manager and businessman said he wants to own 25% of Tesla shares and threatened to take his artificial intelligence and robotics operations outside the company if he is not allowed to achieve that percentage.

Musk’s confrontational style is what characterizes his fight for this monstrous compensation package, unprecedented in history. When McCornick rejected the plan in January, the businessman responded by moving corporate headquarters to Texas.

Musk was responding to leading rocket and space company SpaceX, which he controls and directs from Delaware to Texas, and brain implant company Neuralink to Nevada. Last year, he already moved the headquarters of X, formerly called Twitter, from Delaware to Nevada. Yesterday, Tesla shareholders also approved the company’s move to Texas, as well as the ratification of advisers Kimbal Musk and James Murdoch, the son of a Democrat who clashes with the rest of Trumpist media businessman Rupert Murdoch’s family. .

Both Texas and Nevada are making huge efforts to attract companies, which could turn the United States into a series of states with tax regimes close to tax havens. Texas is also trying to create its own stock exchange to compete with New York. Now,

Tesla shares have risen 10% over the past two days amid speculation, fueled by Musk himself, that the compensation has been approved. Overall, this decision could have a negative impact on the future share price as it will require the issuance of at least 8% additional shares, which will dilute the value of each title.

Tesla has seen its stock market fall 24% this year, making it the worst-performing stock market company outside of aircraft maker Boeing, which has been plagued by technical problems with its planes. Tesla faces significant challenges going forward, including stagnant sales, a small lineup and the personality of Elon Musk, who runs no fewer than seven companies in total. Tesla shareholders are also suing Musk for falsifying the company’s financial statements, and he may have breached his fiduciary duty to them by transferring Tesla’s artificial intelligence (AI) microprocessors to his new technology company, xIA.