Tesla stock fell again Wednesday as the company planned to ask shareholders to vote again on Musk’s 2018 pay package as part of its 2024 preliminary proxy statement.
Musk’s massive 2018 options grant, valued at more than $55 billion when awarded, was voided by a Delaware judge in January, who cited inadequate disclosures made to shareholders.
To...
Tesla stock fell again Wednesday as the company planned to ask shareholders to vote again on Musk’s 2018 pay package as part of its 2024 preliminary proxy statement.
Musk’s massive 2018 options grant, valued at more than $55 billion when awarded, was voided by a Delaware judge in January, who cited inadequate disclosures made to shareholders.
To correct things, Tesla’s board is asking shareholders to vote again.
“Ratification will restore Tesla’s stockholder democracy,” read part of the proxy. “Because 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.”
The Delaware decision has left a bad taste in Tesla’s mouth. The electric vehicle maker also is asking shareholders to approve the company’s reincorporation in Texas, moving it from Delaware. Tesla didn’t immediately respond to a request for comment about the move.
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The company also has the website supportteslavalue.com, which details the voting procedures and issues.
Reauthorizing the 2018 pay package is probably the simplest way to restore Musk’s compensation and it brings some closure to an issue vexing investors in 2024.
Ratification looks likely. Retail shareholders hold more than 40% of Tesla stock, according to Bloomberg. Through Wednesday trading, a poll on X run by Sawyer Merritt has amassed roughly 16,000 shareholder votes with almost 90% indicating they would vote yes on Musk’s pay.
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Tesla’s proxy statement also says that seven institutional shareholders, including four of the top 10, sought a meeting with Tesla board chairwoman Robyn Denholm to discuss the issue.
Tesla stock was up in premarket trading but fell back in the red, closing down 1.1% at $155.45. while the S&P 500 dropped 0.6% and the Nasdaq Composite ticked 1.2% lower. It was the stock’s fourth consecutive drop.
The restoration of Musk’s 2018 pay award doesn’t answer another question facing investors. Musk has said he wants 25% voting control of Tesla stock, without which he would be “uncomfortable growing Tesla to be a leader in [artificial intelligence] and Robotics.”
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With the 2018 options and his stockholdings, Musk controls about 20% of Tesla shares, so he’s about 5% short. Another large award might not be coming. The board could award him supervoting stock. That’s a way to add voting control without adding significantly more shares.
Supervoting stock would require a shareholder vote, like the 2018 pay award.
How to deal with the 25% threshold for Musk, however, appears to be a question for another shareholder meeting.
The 2024 meeting will be held on June 13 in Austin, Texas.
Write to Al Root atallen.root@dowjones.com
