Source: Glonui.

$Tesla (TSLA.US)$On the eve of the shareholder meeting, Musk couldn't hold back his joy and released the good news.

He revealed that both the $56 billion pay package and the decision to move the company's registration to Texas had a great advantage in being passed.

After the news came out, Tesla's after-hours trading rose nearly 9%, and as of the issue, it had risen 5.92%. Overnight, Tesla closed up 3.88% at $177.29, with a total market value of $565.413 billion.

Will Musk get paid?

On Thursday, Musk posted on social media platform X, saying that both of Tesla's shareholder resolutions were passed with a significant advantage.

The image he shared showed that both resolutions had been approved by shareholders. Based on the voting data, Musk's arduous battle for pay is expected to have a good outcome.

What are the two resolutions? One is Musk's sky-high pay package.

As early as 2018, Tesla passed a pay plan that awards Musk about 300 million incentive stock options and received support from more than 70% of shareholders.

Tesla promised that if future performance meets certain financial goals, Musk will have the right to unlock the options in batches.

At the time, the pay plan was worth about $56 billion, and was also known as the most expensive pay plan in history. However, based on Tesla's current stock price, its value has shrunk to $50 billion.

Although it is a sky-high pay, the task is also difficult.

Many believed that this goal was difficult to achieve, but Musk unexpectedly completed it ahead of schedule.

In theory, with the task completed, Tesla should fulfill its original promise, right? But many shareholders now think that the pay plan was too high, and have sued Musk.

In January of this year, a Delaware judge revoked the plan on the grounds of insufficient disclosure to Tesla investors.

Tesla's board of directors, which supports Musk, expressed shock at the move. Musk also expressed anger at the move on social media, saying,

"Never register your company in Delaware."

Subsequently, the board of directors resubmitted the plan for a vote after providing new disclosure information, and the results were announced at the June shareholder meeting.

Last weekend, Musk posted that about 90% of retail shareholders had voted in favor of his pay plan. About 45% of tradable shares held by non-insiders are said to be held by retail shareholders.

In addition, Musk has received support from some institutional shareholders, such as Baron Capital and ARK Invest, who have publicly expressed support for the plan.

Yesterday (June 12th), Tesla officially listed Musk's past achievements to campaign for his sky-high pay.

Tesla officials said that Musk led Tesla from a loss-making company to a world-changing company. He created massive value for Tesla shareholders, with more than $735 billion (approximately RMB 53 trillion) in value.

Musk fulfilled his promise. Now it's time for us to fulfill our promise. Tesla shareholders, please cast your valuable vote.

Of course, many major shareholders are strongly opposed.

Norway's $1.7 trillion sovereign wealth fund, the eighth largest Tesla shareholder in the world, announced on Saturday that it will vote against Musk's exorbitant compensation plan.

Previously, the California Public Employees' Retirement System (Calpers), which holds about 9.5 million shares of Tesla, also publicly stated that it plans to vote against the compensation plan.

One of Tesla's largest individual investors, Leo Koguan, a billionaire in Singapore's real estate industry, also announced earlier that he will vote against the compensation plan and against moving Tesla's legal base out of Delaware.

What will happen if the exorbitant compensation plan is not approved? There may be several outcomes:

Renegotiation: The Tesla board of directors may revise the compensation plan to address shareholder concerns and comply with prior court rulings. This may involve reducing the overall size of the compensation plan, altering the structure of stock options, or strengthening board supervision during the formulation process.

Performance-based compensation: The board of directors can turn to a more traditional performance-based compensation structure, directly linking Musk's compensation to specific company goals, rather than just stock prices. This can motivate Tesla to achieve broader success beyond just short-term market returns.

Is Tesla moving?

Another resolution is to relocate Tesla's registered office to Texas.

This was also proposed by Musk after the $56 billion compensation plan was deemed invalid.

At the time, he launched a vote on social media, asking whether Tesla should move its registered office to Texas.

And more than 1.1 million votes were in favor of the move, with over 87% in favor.

Previously, Tesla had moved its headquarters out of California in 2021, when Musk severely criticized the state's regulations and taxes.

And Musk's latest move aims to attack the main industry of Delaware - registration industry. Currently, nearly 70% of Fortune 500 companies are registered in Delaware.

At present, the market is closely watching the upcoming Tesla shareholders' meeting.

On June 13th, local time (4:30 am on June 14th Beijing time), the meeting will be held at Tesla's super factory in Texas.

"Wood Sister" warned that if shareholders go against Elon's compensation plan, which was supported by 73% of the vote in 2018, the publicly traded stock market will lose the opportunity to invest in one of the most innovative companies in the world, thereby depriving retail investors of the opportunity to invest.

However, Baird believes that it is possible for Musk's compensation plan to be rejected because many individual investors did not participate in the vote, or simply followed the recommendations of proxy advisory firms.

According to a Morgan Stanley analyst survey of clients, more than half of the respondents expect the voting result to be in favor of the compensation plan. Even if the plan is approved, the bullish sentiment may have already been priced in by the market, and the Tesla stock price may have more downside in the short term after the voting results are announced.

Bernstein analyst Toni Sacconaghi expects Tesla's stock to fall 5% if shareholders vote against the plan.

Regardless of the result, as CEO and major shareholder, Musk will continue to have a significant influence and will be the "soul" of Tesla, which has been hotly discussed.

Editor/tolk