A look at the potential outcomes as Tesla shareholders get set to vote on Musk’s pay package

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Tesla’s board is hoping shareholder approval will give the electric vehicle maker the legal ammunition it needs to reinstate the US$56-billion pay package, though that is far from certain

shareholder vote on Thursday on whether to reinstate CEO Elon Musk’s $56-billion pay package that was shot down by a Delaware judge will not provide a quick resolution, irrespective of the tally’s results.

Tesla included McCormick’s ruling in its disclosures to shareholders ahead of the vote on Thursday, and has said it plans to argue that an affirmative result would show that shareholders back the package with full knowledge of McCormick’s criticisms. Tesla is also asking for shareholder approval at its annual meeting on Thursday to move its corporate domicile to Texas, outside the reach of Delaware courts. It has said it does not plan to use the move to ignore McCormick’s ruling, and she has accepted those assurances.

Tesla argues that the costs to shareholders will be significantly greater if the pay package is not reinstated. The company booked a $2.3-billion accounting charge to issue it in 2018. It estimates that to give Musk a new package with the same economic benefit, the accounting charge it would have to take would be more than $25-billion because of the rise in Tesla’s shares since 2018.

 

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