Here’s what’s at stake in Tesla shareholders’ vote over Elon Musk’s $56 billion pay package

Elon Musk is on the verge of yet another massive payday.

Tesla shareholders were set to approve a $56 billion pay package for the billionaire, the electric vehicle-maker’s CEO said in a post on X late Wednesday.

Musk shared early results on the social media platform that he owns that show via a chart the resolution is set to pass by wide margins. To be sure, shareholders are allowed to change their votes up until the start of the annual meeting on Thursday.

Shares of Tesla were up more than 4% in Thursday afternoon trading on the optimism. Some investors and analysts feared that if the resolution weren’t approved, Musk would follow through on threats to take his artificial intelligence ideas elsewhere.

“In a nutshell, if this proposal went south a lot of bad things and scenarios could have happened including Musk beginning a path to not being CEO of Tesla,” Wedbush analyst Daniel Ives said in a note to investors. “This removes a $20-$25 overhang on the stock in our opinion.”

Despite the boost from Musk’s assurances, Tesla stock is under pressure. The stock is down more than 25% this year as of Thursday afternoon. The company is set to report delivery numbers in the coming weeks for its second quarter, which shows how strong the vehicles are selling. The company missed estimates on sales for the first quarter by a wide margin, and many are expecting a continued slowdown.

Still, the $56 billion payday is ultimately an endorsement of Musk’s leadership and what’s to come. A Tesla Board chair said in a regulatory filing that the package was crucial for “retaining Elon’s attention and motivating him.”

Musk isn’t completely out of the clear if shareholders approve the payday later in the day. A Delaware judge ruled against the package in January, saying that it was unfair to the company’s shareholders. The current shareholder vote is a way to drum up its appeal to the ruling. Tesla could appeal up to the Delaware Supreme Court.

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