Tesla Inc. shareholders resoundingly backed a proposal to approve Elon Musk's multibillion-dollar compensation package, according to voting details released on Friday.
The proposal's passage was announced at Tesla's annual shareholder meeting on Thursday, though the total amount was not disclosed. In the end, about 72% of voting shares, excluding those owned by Musk and his brother Kimbal, supported the compensation package.
Many Tesla investors have been concerned for months about how committed the CEO would be to running the electric car company since a Delaware judge struck down Elon Musk's compensation.
The compensation plan requires Musk to hold his shares for at least five years before selling them, meaning the value of his compensation package will continue to fluctuate until he can sell them. As of Thursday's closing price, his shares were worth about $48 billion.
Addressing shareholders after the vote, Musk pledged his commitment to Tesla, saying his compensation package was “not actually cash and I can't run away from it, nor do I want to.”
Tesla shares continued to rise on Friday, up about 1% in premarket trading after rising about 3% on Thursday, extending gains they had made after Musk said the pay vote was on track to be approved before the official results were released. Musk's legions of online supporters celebrated the vote and analysts revised their reports on Tesla's outlook.
The vote was “a vote of confidence in Elon,” Bernstein analysts wrote in a note after the results were announced. “While there remains uncertainty about the legal process and future actions, the vote was clearly a success by that standard and should ease concerns that Elon might leave the company or focus more on other things.”
Tesla's board had hoped that a second approval of the compensation, first approved in 2018, would persuade a Delaware court to overturn the ruling. The judge in the case said the compensation was excessive and that it was directed by Musk to a board with which he has personal ties.
The compensation package would raise Musk's stake in Tesla to 20.5% from about 13%. Musk has said he would like to own 25% of the company, saying in January that it would be “enough to have some influence, but not so much that it would overwhelm me.” If he couldn't own that much, he said, “I'd rather be building products that aren't Tesla.”
Even after this week's gains, Tesla shares are still down more than 20% this year, compared with a 14% rise in the broader stock market. The company remains the dominant automaker, with a market capitalization of nearly $600 billion, but worries about growing competition and sluggish demand for its models have weighed on the stock.
At a shareholder meeting on Thursday, Musk sounded typically bullish about Tesla's self-driving technology, including a promised fleet of robotaxis, and said the company's humanoid robot, Optimus, could grow into a multi-trillion-dollar business of its own.
According to FactSet, market analysts are divided on Tesla's future, with about 40% rating the stock a “buy,” 20% rating it a “sell,” and the rest rating it a “hold.” The range of price expectations is wide, averaging roughly the same as the stock's current price.
Bernstein's price target suggests a 30 percent downside, and the analysts rate the stock “underperform.” Others are more optimistic: Wedbush analysts think the stock could rise 50 percent from here, and rate it “outperform.” The pay vote result was “a champagne-popping moment,” they wrote. “Tesla is Musk, and Musk is Tesla.”
Peter Eavis and Jack Ewing Contributed report.