Tesla Stock Up As Elon Musk Says Stockholders Set To Approve $56 Bln Pay Package

(RTTNews) - Tesla Inc. shares were gaining around 8 percent in the pre-market activity on the Nasdaq on Thursday after its founder and CEO Elon Musk on late Wednesday said the shareholders are set to approve two Board resolutions, including his $56 billion pay package.

The luxury electric car maker's shareholders have been voting on Musk's pay package as well as a resolution to move its incorporation to Texas. A decision is pending at the company's annual meeting on Thursday.

In his social media platform X, Musk said, "Both Tesla shareholder resolutions are currently passing by wide margins! Thanks for your support!!" Further details have not been disclosed.

The shareholders remain divided over the proposed pay package, which is considered the largest in U.S. corporate history. It was initially approved by the shareholders in 2018, but faced severe scrutiny and was voided in January this year by Chancellor Kathaleen McCormick, who called it deeply flawed as the package was approved due to Musk's substantial relation with the Board.

Those in favor argue that Musk is integral to Tesla's future success, while certain others say the compensation is too excessive and detrimental to the company's best interests, and that Musk is distracted by his other companies, especially social media platform X.

Last week, Tesla board chair Robyn Denholm had requested shareholders to approve the hefty pay package or risk losing him as the CEO of Tesla. He then noted that "Elon is not a typical executive, and Tesla is not a typical company. So, the typical way in which companies compensate key executives is not going to drive results for Tesla. Motivating someone like Elon requires something different."

As per reports, billionaire investor and Tesla shareholder Ron Baron plans to vote in favor of the pay package, saying that "Tesla is better with Elon. Tesla is Elon." Meanwhile, The California State Teachers' Retirement System and Norway's sovereign wealth fund objected to the package, claiming the value was too high.

Proxy advisors Institutional Shareholder Services and Glass Lewis also recommended to vote against the package.

Further, the resolution to move its state of incorporation to Texas from Delaware was put forward after Musk earlier this year had asked his followers in X about the possible move, which got a significantly positive response.

The proposal was taken following the Delaware judge's decision on the pay package. Responding to the ruling, Musk then had stated, "Never incorporate your company in the state of Delaware. I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters."

In 2021, Tesla had moved its corporate offices from Palo Alto, California, to Austin, Texas, due to issues with the state's regulations as well as clashes with health officials regarding the opening of the Fremont facility during the pandemic period.

The latest developments come as the car maker is struggling with weak demand and tough competition in the U.S. and Europe, as well as in its major market of China.

Tesla shares closed Wednesday's trading at $177.29, up 4 percent. In pre-market activity on the Nasdaq, the shares are currently trading at $191.31, up 7.9 percent.