Tesla shareholders will decide on June 13, 2024, whether to approve a massive $55.8 billion pay package for CEO Elon Musk. A Delaware court voided the original 2018 approval in January 2024, citing flawed disclosure and saying shareholders didn’t have enough information to make an informed decision. Now Tesla’s asking shareholders to vote again with better transparency about potential conflicts of interest.
Tesla shareholders will vote June 13 on a $55.8 billion pay package for CEO Elon Musk after a court voided the original 2018 approval.
The compensation package spans ten years, from 2018 through 2028. It’s divided into twelve separate payouts tied to specific goals. Musk only gets paid if Tesla hits certain targets for market value and operational performance. If the company doesn’t meet these goals after ten years, he gets nothing.
The original 2018 vote passed with 56% support, and 63% of shareholders participated. For this June vote, the company only needs a simple majority—more than 50% of votes cast—to approve the package. That’s a lower bar than many expect.
Big institutional investors control a significant portion of Tesla shares. Vanguard and BlackRock together own roughly 10% of the company. The top fifty institutional holders control about 44% of shares. Some major proxy advisory firms recommend voting yes, citing the package’s performance-based structure. Others advise voting no due to governance concerns.
Musk’s compensation depends on ambitious targets. Tesla’s market value needs to grow $500 billion from its 2018 baseline. Currently, Tesla’s market cap sits around $550 billion, already far exceeding initial expectations. Eight of the twelve payment tranches have already been earned. The company’s achieved more than 100% of its original market cap goal.
Retail shareholders historically support Musk initiatives. Combined with backing from major institutions, approval seems plausible. However, governance critics argue the package’s size raises questions about board independence and decision-making processes.
The court ruling caught many by surprise. It demonstrated that shareholder votes require proper disclosure and legitimate voting processes. The June vote will test whether shareholders approve Musk’s compensation when given fuller information about how the board handled the original decision-making process.
Unlike Tesla’s no-haggle pricing policy for vehicle purchases, executive compensation packages like Musk’s remain subject to shareholder negotiation and approval.