Tesla Shareholders' Meeting: Sky-high Remuneration Plan Approved, Can Musk Stop Falling Stock Prices
Tesla's shareholders' meeting was held on Thursday EST in Austin, Texas, USA. The conference voted on 12 proposals, the most important of which were passed: Tesla shareholders approved CEO Musk's sky-high salary plan of 56 billion US dollars, and also supported Tesla's move of registration from Delaware to Texas in the US.
At the conference, Musk also explained Tesla's vision. He said that the current weekly production of Cybertruck has exceeded 1,300 vehicles; in the future, it will be necessary to produce different versions of Cybertruck for the European Union and China; accelerate the production of the Semi semi-trailer truck; and there are three new products to be released in the future.
Sky-high pay has its ups and downs
In 2018, Tesla shareholders approved Musk's sky-high compensation plan with 73% of the votes in favor.
The plan: Starting January 21, 2018, once Tesla reaches two progressive milestone goals at the same time, Musk will receive the company's stock options. Every time the target is reached, it is equivalent to 1% of the total amount of shares in the company's total tradable stock.
The program has a total of 12 goals. The goals for each phase include:
(1) The company's market value increased by 50 billion US dollars
(2) Both operating indicators of revenue (revenue) and profit before interest and tax (EBIDA) met the standards at the same time.
If all of the targets for the 12-term period are achieved, Tesla's revenue will be equivalent to an increase of 21 times compared to 2017, profit before interest and tax will be equivalent to an increase of 17 times, and the market value will increase 11 times.
Under these circumstances, Musk will receive a total of 12% of the company's stock option rewards。Given that Musk already owns 13% of Tesla's shares,This also means that his shareholding ratio will reach 25% after his salary is paid.
This compensation plan was announced at the beginning of 2018. At the time, Tesla's market value was only about 59 billion US dollars. In the opinion of many people, the difficulty of implementing this plan is simply a fantasy. At the time, the news media also used the term laughable (ridiculous) when reporting on this plan.
None of them are optimistic about you, but on the other hand, you are the most aggressive; Lao Ma actually did it.
Since 2018, Tesla's business has advanced rapidly, and the company's market capitalization surpassed 1 trillion US dollars at its highest. Even though the company's stock price fell sharply in 2023, it still has a market value of more than 600 billion US dollars today, which is more than 10 times the market value in 2017.
According to the original salary plan for 2018, Musk has already achieved the previously set milestone target and is able to collect 12% of the company's shares.
Meanwhile, in January of this year, a Delaware judge vetoed the 2018 salary plan, leaving this sky-high salary in vain.
The court found that there were significant problems with the approval process for this compensation plan, including misleading disclosure of information and a lack of independence in board decisions.
And Musk was no slouch, and later stated on social networking platform X that he would no longer register a company in Delaware. After receiving widespread support from netizens, Musk finally decided to move Tesla's place of registration to Texas and asked shareholders to vote again on this compensation plan at the shareholders' meeting.
Although this vote is seen as a public opinion test of Musk's leadership in Tesla, most ordinary investors support Musk, while some institutional investors say they will oppose this plan, believing that Musk's salary plan is too high.
“First, it sends a message that Tesla's retail shareholders do approve of the company's current development. Once the exact voting ratio is announced, it will provide us with more interesting information,” —Lindsey Stewart, Director of Sustainalytics
Meanwhile, Musk himself stated on X the day before the June 14th shareholders' meeting that this compensation plan will be approved. The end result is already known to everyone.
Meeting content and results
At this conference, Tesla shareholders voted on 12 proposals, which covered various aspects such as corporate governance structure, executive remuneration, and sustainable development.
Proposal 1: Election of two Class II directors for a three-year term Tesla proposes to elect two directors — Musk's brother Kimbal Musk (Kimbal Musk) and James Murdoch (James Murdoch), son of media mogul Rupert Murdoch (Rupert Murdoch), for a term of three years, or until their respective successors are officially elected and qualified.
Board of Directors: Agree
Shareholders: Agree
Voting Results: Passed
Proposal 2: Based on non-binding recommendations, Tesla proposes to approve executive compensation plans
Board of Directors: Agree
Shareholders: Agree
Voting Results: Passed
Proposal 3: Approve the relocation of Tesla's registration from Delaware to Texas
Board of Directors: Agree
Shareholders: Agree
Voting Results: Passed
Proposal 4: Approve Elon Musk's 100% Performance Stock Option Rewards Approved by Shareholders in 2018
Board of Directors: Agree
Shareholders: Agree
Voting Results: Passed
Proposal 5: Approval of PricewaterhouseCoopers as an independent certified public accountant for fiscal year 2024
Board of Directors: Agree
Shareholders: Agree
Voting Results: Passed
Proposal 6: Shareholders' Proposal to Reduce the Term of Directors to One Year
Board of directors: against
Voting Results: Passed
Proposal 7: Shareholders' Proposal to Adopt Simple Majority Voting Requirements in Corporate Governance Documents
Board of directors: against
Voting Results: Passed
Proposal 8: Shareholder Proposal Proposed Annual Report on Anti-Sexual Harassment and Discrimination Efforts
Board of directors: against
Voting Results: Not Passed
Proposal 9: Shareholders' Proposal to Adopt a Freedom of Association and Collective Bargaining Policy
Board of directors: against
Voting Results: Not Passed
Proposal 10: Shareholder Proposals, Proposals Report on Impacts and Risks Related to Electromagnetic Radiation and Wireless Technology
Board of directors: against
Voting Results: Not Passed
Proposal 11: Shareholder Proposals to Set Goals and Report on the Feasibility of Incorporating Sustainability Metrics into Executive Compensation Plans
Board of directors: against
Voting Results: Not Passed
Proposal 12: Shareholders' Proposal Proposed Commitment to Suspend Mineral Procurement for Deep Sea Mining
Board of directors: against
Voting Results: Not Passed
At Tesla's shareholders' meeting, Musk had in-depth discussions with shareholders on topics such as the company's future, technological innovation, product planning, and personal roles. The personalization of the Optimus robot, the international market expansion of Cybertruck, the reduction in battery costs, and the continuous update of FSD technology were the focus of the conference.
At the conference, Musk announced that Tesla will soon launch an autonomous taxi (Robotaxi) service, detailed the technology and strategic partnerships behind it, and responded to Tesla's future strategic developments at the conference.
Analysts expect these innovations will boost Tesla's market share and profit margins, thereby indirectly boosting stock prices.
A special version of the CyberTruck must be manufactured for China and the European Union. It is promised that Tesla will begin “limited production” of Optimus Prime in 2025 and test the humanoid robot at its own factory next year. Musk predicts that next year, the company will “have more than 1,000 or thousands of Optimus Prime robots working at Tesla.” Since January of this year, 65% of advertisers on the X platform have returned. Currently, small companies account for most of Company X's advertising revenue. The Optimus robot could make Tesla a $25 trillion company.
He also showcased next-generation battery technology, which can significantly improve vehicle range and reduce charging time, and is critical for electric vehicle users and autonomous taxi operations.
These moves are in line with investors' expectations and have increased the appeal of the company's shares to ESG funds and socially responsible investors.
If investors want to plan their investments after Tesla's shareholders' meeting, they need to be very careful. In addition to paying attention to major decisions and technological innovations at the shareholders' meeting, they should also pay attention to verifying the authenticity of the information and whether the results achieved are in line with expectations. If investors plan to invest in Tesla stock, the reasonable approach is to monitor Tesla's stock price trend through brokerage platforms such as BiyaPay and choose the right time to trade.
Or use it as a professional US and Hong Kong stock deposit and withdrawal tool, deposit digital currency (USDT) to BiyaPay, and then withdraw fiat money to other securities to profit from investments.
Furthermore, according to market conditions, Tesla's stock price rose immediately after the conference. It rose about 1.8% in after-market trading on the day of the conference, and continued to rise more than 3% in early trading the next day.
Investment advice
Overall, the impact of Tesla's 2024 shareholders' meeting on stock prices was positive. Technological innovation and corporate strategy adjustments are viewed by the market as major favorable factors, driving up stock prices.
However, court rulings and unpassed shareholder proposals could plunge Musk into a protracted legal battle, which is expected to be appealed. If the appeal fails, the company's place of registration is now moved to Texas, which allows Tesla's board of directors to restart the compensation plan in the newly registered state, which may be more court-friendly.
Taken together, the conference showcased Tesla's firm commitment to technology, strategy, and sustainability, and Tesla remains a leader in the field of electric vehicles. It has many competitive advantages, including scale, brand awareness, and effective vertical integration. The field is expected to maintain long-term growth over the next few years or even decades.
As of Thursday, Tesla's market value was about 580 billion US dollars, and the pre-market stock price rose more than 6% at one point. The entire S&P 500 is currently worth $45.5 trillion, according to FactSet.
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