Tesla Shareholders Will Vote on Elon Musk’s Big Payday. What Happens Then?


After months of fighting over a pay package promised to Elon Musk six years ago — one that included stock grants now worth about $56 billion — matters are finally coming to a head.

At Tesla’s annual meeting on Thursday, shareholders are set to vote on whether to reapprove the compensation deal after a Delaware judge voided it in January. The outcome could shift Musk’s relationship with the company, and Tesla officials aren’t taking any chances.

“If Tesla is to retain Elon’s attention and motivate him to continue to devote his time, energy, ambition and vision to deliver comparable results in the future, we must stand by our deal,” Robyn Denholm, the company’s chair, wrote to investors on Wednesday.

Regardless of the vote’s outcome, further lawsuits and other battles may follow, some of which could test the corporate legal system. Here’s our guide to how different situations could play out.

Tesla could use shareholder approval to argue its case for Musk’s pay in court. If it wins the vote on Musk’s compensation, the company is likely to go to Chancellor Kathaleen McCormick, the judge in Delaware’s Court of Chancery who rejected the compensation scheme, and argue that shareholders — armed with the information that she said they hadn’t had when they approved the package — have reratified the proposal. That, the company is expected to say, makes the matter moot.

If McCormick declares the plan acceptable, the plaintiffs who initially sued over it are likely to appeal to Delaware’s Supreme Court. Among their potential arguments: The new vote doesn’t resolve a matter that was already decided by a judge, and shareholders’ votes may have been influenced by implied threats to Tesla’s future if the vote didn’t go Musk’s way.

A shareholder rejection of the pay package could result in a new deal — or a lawsuit. The company would most likely continue its efforts in the Court of Chancery to reinstate the 2018 agreement. But Tesla said in a Monday filing that if that plan was not ultimately ratified, the automaker might need to negotiate a replacement compensation plan with Musk “in order to motivate him to devote his time and energy to Tesla.” It added that “for Musk to agree to it, any new plan would need to be of a similar magnitude to the 2018 plan.”

As Ben Kallo, an analyst at Robert W. Baird, put it to DealBook: “It’s a ‘take my ball and go home’ sort of thing.”

Because the value of Tesla’s stock has increased significantly since 2018, creating a replacement plan may ultimately be more expensive than reinstating the old one. Tesla took a $2.3 billion accounting charge for the original plan. The company estimated it would need to take more than a $25 billion accounting charge to deliver a functionally equivalent plan today.

Another potential outcome if the matter doesn’t go Musk’s way: He could try a novel legal tactic by suing to demand that he be paid anyway, since he essentially had a contract to receive that money.

Tesla’s proposal to reincorporate in Texas is also up for a vote on Thursday. If the company wins that vote and moves to Texas, it will continue its efforts in Delaware’s Court of Chancery to reinstate the compensation package. In that case, Musk’s critics worry that Tesla could use courts in its new home to attack its old one.

It would be highly unusual and aggressive for a state’s judiciary to allow such an assault on another state’s judiciary, said Ann Lipton, a business law professor at Tulane University. That said, McCormick has put the onus on Tesla’s Delaware lawyers to tell her if the company decides to weaponize the Texas courts. It’s unclear what she would do if that happened.

Will the proposals pass? Some context to consider:

  • The compensation proposal requires a majority of votes cast at the meeting to pass. The reincorporation issue requires a tougher standard: a majority of Tesla’s outstanding shares.

  • Tesla has a higher percentage of retail investors in its shareholder base — 44 percent, according to S&P Global Market Intelligence — than any other company in the S&P 500. In Tesla’s case, they’re more likely to vote how Musk wants them to, but traditionally it’s challenging to get small shareholders to vote at all.

  • Two influential shareholder advisory firms, Institutional Shareholder Services and Glass Lewis, have urged investors to reject the compensation plan, but they provisionally supported the reincorporation proposal. Advice from these so-called proxy advisers traditionally has held significant sway over institutional shareholders.

The bottom line: “The new vote only adds complexity; it doesn’t remove it,” Lipton said. And that uncertainty isn’t helpful for Tesla: “I think it weighs on investor sentiment,” said Kallo, “whether that’s reality or not. — Michael de la Merced

The United States added far more jobs last month than expected. The jobs report for May showed that 272,000 were created, well above what economists expected. The surprisingly strong showing pushed back market expectations that the Federal Reserve will cut rates in September.

GameStop stock plunged after the retailer announced a share sale. The meme stock closed almost 40 percent lower yesterday despite Keith Gill, an investor known as @roaringkitty on social media, holding a livestream event on YouTube to drum up interest. Shares had soared more than 150 percent since mid-May after Gill began posting on X again after a long hiatus.

Regulators target the artificial intelligence sector. The Federal Trade Commission and Justice Department are set to proceed with investigations of Nvidia, Microsoft and OpenAI over their dominance in the industry. But geopolitics could complicate those efforts: Washington helped engineer a deal for Microsoft to buy a stake in G42, an Abu Dhabi A.I. start-up, to prevent China from getting access to G42’s technology.

The first heat wave of what is expected to be another unusually hot summer enveloped the Western United States this week, with temperatures rising to record highs in Phoenix, Las Vegas and other cities. As periods of excessive heat become more frequent and last longer, executives are noting impacts on their businesses.

In recent years, mentions of “excessive heat,” “extreme heat” and “heat waves” have peaked during third-quarter earnings calls, according to AlphaSense, a data platform.

Companies from Disney to Walmart have noted the impact of extreme heat. Some recent examples:

  • “We estimate that adverse weather reduced full-year attendance by over one million guests,” said Gary Mick, the chief financial officer at Six Flags Entertainment, in a February conference call. “This includes rain and snow in California during spring break, followed by a record summer heat wave in Texas and eight consecutive weekends of rain or threat of rain in the Mid-Atlantic and Northeast after Labor Day.”

  • The chief financial executive of Constellation Energy, Daniel Eggers, said in a November conference call that as a result of extreme heat in Texas, the operator of the state’s grid “set 10 new peak demand records during the summer.”

  • Ronald Coughlin, the chief executive of Petco at the time, noted in August that “as a result of the extreme heat, we were able to drive our flea and tick business leading to Rx sales up nearly 20 percent year over year.”

Heat waves have a big economic impact. A 2022 study, published in the journal Science Advances, that looked at the impact of human-caused heat waves between 1992 and 2013 estimated that they cost the global economy between $5 trillion and $29.3 trillion. Those costs are likely to rise over time.


When Erika Ayers Badan started as the C.E.O. of Barstool Sports in 2016, the company had recently been valued at about $12 million. Seven years later, before she stepped down, the gambling company Penn Entertainment paid $551 million for the suite of often controversial blogs, podcasts and videos. (Barstool’s founder, Dave Portnoy, brought it back shortly later.)

Taking the job at an unproven media company alongside Portnoy, who The Times wrote in 2022 “rose to fame by capitalizing on misogyny and other offensive behavior,” and becoming the company’s first female employee on top of it was a huge risk. In her upcoming book, “Nobody Cares About Your Career,” Ayers Badan argues for taking those sorts of bets, among other career advice. She talked with DealBook’s Sarah Kessler about why companies needed a point of view and about leading a company that was ostensibly for men. The interview has been condensed and edited.

You wrote: “Women have two ways to change our situation. They can change it from a place of advocacy that’s pure but on the outside” or “they can push from the inside.” How did that work for you?

One of the things that I was very sensitive to when I joined Barstool was this perception that I was essentially conducting career suicide by going to a perceived male company. And what I proved is that I took the right job and I was able to make something incredible come out of it, alongside some really incredibly talented people.

That’s progress for women in the same way as women who are making progress outside of the stereotypically male-dominated environment. Both are really important.

Do you think women should still be leaning in, by which I mean being aware of all the biases against us and trying to adjust our behavior accordingly?

We have to be a whole lot less perfect than the women who came before us, who had to be a whole lot less perfect than the women who came before them. And I think that’s incredibly exciting.

But you don’t have to play it a certain way. I think I’m a good testament to that.

Part of what made Barstool successful was that it was not well behaved. At the same time, the company’s reputation shut off some business opportunities, like when the show with ESPN got canceled after one episode. Is that trade-off worth it?

For better or worse, we are in an era of influence. And to become influential, you need to be opinionated and you have to show a point of view. You have to get people’s attention. All media will look like that over time, as it becomes more fragmented and people have to find a way to go viral. The gatekeepers are, in large part, gone. You can’t just say nothing. The entire media ecosystem has changed. And for me, the trade-off was infinitely worth it.

It feels like most executives are in a moment where they really don’t want to speak out on issues or say anything that could potentially cause a backlash.

You see people opting out altogether. And I don’t know how long that works — it works if your product can speak for itself.

Thanks for reading! We’ll see you Monday.

We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.



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