DETROIT (AP) 鈥 If Tesla shareholders vote against restoring Elon Musk's $44.9 billion pay package Thursday, the CEO could deliver on threats to take artificial intelligence research to one of his other companies. Or he could even could walk away.
If they approve the all-stock compensation package , it would almost guarantee he would remain at the company he grew to be the world leader in electric vehicles, shifting to AI and robotics including autonomous vehicles, which Musk says is Tesla's future.
But even with , which many analysts say is likely, there would be uncertainty. Musk has threatened on X, his social media platform, to develop AI elsewhere if he in Tesla (He owns about 13% now). Musk's xAI recently received to develop artificial intelligence.
Wedbush Analyst Dan Ives said he expects the package to be overwhelmingly reapproved, ending a lot of uncertainty with Musk. 鈥淭his issue has been an overhang on Tesla鈥檚 stock, and this will be important to move this distraction in the rearview mirror,鈥 Ives wrote in a note to investors.
Shares of Tesla Inc. have slumped more than 30% this year with the company warning of 鈥渘otably lower鈥 sales growth in 2024.
Also on the shareholder ballot is the related issue of moving the electric vehicle maker's legal home out of Delaware to Texas.
The move is designed to escape from the Delaware court's oversight and possibly a that invalidated Musk's pay package. In a January opinion on a shareholder lawsuit, the judge determined that Musk controlled the Tesla board and is not entitled to the landmark package once worth nearly $56 billion.
Multiple institutional investors have come out against that sizeable payout, some citing falling vehicle sales, price cuts and the tumbling Tesla stock price. But Tesla's top five institutional shareholders, Vanguard, BlackRock, State Street, Geode Capital, and Capital Research either said they don't announce their votes or wouldn't comment. They control about 17% of the votes.
Erik Gordon, a business and law professor at the University of Michigan, said individual shareholders are likely to vote for the package, and they own more than half of Tesla's shares.
One institutional investor who came out against the package is California's State Teachers Retirement System. The large pension fund said Tuesday that it would vote against Musk's pay "based on its sheer magnitude, and because the award would be extremely dilutive to shareholders. We also have concerns with the lack of focus on profitability for the company.鈥
In May, two big shareholder advisory firms, ISS and Glass Lewis,
But Tesla and Musk have unleashed a furious lobbying effort to get the package approved, in posts on X, television appearances and in proxy filings with the U.S. Securities and Exchange Commission.
鈥淥nly 2 days left to protect & help grow the value of your investment in $TSLA by voting FOR ratification of the 2018 CEO Performance Award,鈥 Tesla posted on X early Tuesday.
Tesla Chairwoman Robyn Denholm, in a letter to shareholders, wrote that the package was approved by 73% of the vote six years ago. 鈥淏ecause the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value. That strikes us鈥夆斺塧nd the many stockholders from whom we already have heard鈥夆斺塧s fundamentally unfair, and inconsistent with the will of the stockholders who voted for it,鈥 she wrote.
Tesla has said the 2018 award incentivized Musk to create over $735 billion in value for shareholders in the six years since it was approved.
If Tesla finalizes the vote on moving the company's legal home to Texas before the vote on Musk鈥檚 pay package, and it manages to file the paperwork in Austin and get approval of the move, then the effect of the Delaware court ruling could be in doubt. Reapproval of the pay package would then be done as a Texas corporation and could fall under the purview of Texas courts.
Anticipating a quick move by Tesla, lawyers for the shareholder who filed the lawsuit seeking to block Musk鈥檚 pay deal, Richard Tornetta, filed motions in Delaware last month seeking an order stopping Tesla from trying to move the case. Tesla responded in letters to the judge that there is no cause for such concerns because they won鈥檛 seek a move. Besides, Tesla would still be a Delaware corporation at the time of this week's shareholder vote, they wrote.
In an order denying Tornetta鈥檚 motions, Chancellor McCormick wrote that she interprets Tesla鈥檚 letters to mean it has no intention of relocating the case to Texas. 鈥淭he defendants鈥 statements give me great comfort,鈥 she wrote.
Eric Talley, a Columbia University law professor, said the lawyers are unlikely to try to move the case because their livelihood is handling business cases in Delaware courts.
But it鈥檚 also possible that the unpredictable Musk could change lawyers.
McCormick, Talley said, is telling the lawyers 鈥淥K, I鈥檓 going to believe you, but I鈥檓 going to be really irritated if this is a big send up for these things that you said you鈥檙e not going to do.鈥
Talley, who also is a Tesla shareholder and said at present he plans to vote against Musk鈥檚 pay, expects Tesla to follow through with appealing McCormick鈥檚 ruling to the Delaware Supreme Court.
