Shareholders are also voting on a proposal to reincorporate Tesla in Texas, which could work against the company's efforts to reverse the Delaware court's ruling and may not be favored by institutional investors who prefer Delaware's predictability. The votes will take place at Tesla's Austin factory and will be a test of whether shareholders believe in Musk's vision of Tesla as more than just a car company, but a tech, AI, and robotics company.
Key takeaways:
- Tesla shareholders are set to vote on CEO Elon Musk's $50 billion compensation package, which was invalidated by a Delaware court judge last year due to a flawed process and lack of shareholder insight.
- Musk has threatened to spin out Tesla's AI division into another company if he does not receive 25 percent of the company, and is also pushing for a proposal to reincorporate Tesla in Texas to avoid Delaware's shareholder-favoring court system.
- The vote is seen as a showdown between institutional investors and retail investors, who make up 43 percent of Tesla's shareholders. Several top proxy advisory firms have recommended voting against the proposal.
- Even if Musk wins the vote, Tesla still needs to file its appeal to the Delaware court’s ruling for him to receive his compensation. The proposal to reincorporate in Texas could work against this appeal and may not be favored by institutional investors.