Tesla shareholders today voted to reinstate a multibillion pay package for CEO Elon Musk – which analysts say will boost his company in its ongoing legal fight to overturn a Delaware court’s rejection
of the plan. There were local ramifications.

We all had some skin in the game as Tesla shareholders voted on a remuneration package for chief executive Elon Musk that could be worth more than US$44.9 billion ($72.7b), depending on stock performance.

The NZ Super Fund has 766,283 shares in the EV maker, worth US$140m ($231m), a spokesman told the Herald yesterday, on the eve of the vote.

Even though the Super Fund has trimmed its stake (it held 862,348 Tesla shares as of December 30), that still makes it one of the fund’s larger offshore equity stakes.

So how did our national superannuation fund vote at the firm’s annual meeting, this morning NZT?

“We vote against Resolution 4 [calling for the reinstatement of Musk’s multibillion compensation] – consistent with how we voted when this was first proposed in 2018,” a spokesman for the Guardians of the NZ Super Fund said.

“The Guardians support executives’ pay being linked to company performance. We also believe that executive remuneration should be fair and reasonable. We did not support the proposal in 2018 and do not support it now.”

After Musk bought the firm, Tesla almost single-handedly created the EV market, becoming an automotive powerhouse and the world’s most valuable car maker by market cap. But the firm recently reported its first drop in sales (outside pandemic lockdowns in 2020) and a plan to cull 10 per cent of its workforce.

Its shares have struggled over the past 18 months amid high interest rates, Western Governments dialling down subsidies and cheaper Chinese competition. The firm’s boosters hope Musk’s plans for a low-price EV and AI-enhanced features for higher-end models, will fuel a comeback over the next few years.

Keep him focused

Tesla’s board – including his brother Kimbal Musk and James Murdoch, son of media mogul Rupert Murdoch – argued the supersized pay package was needed to motivate Musk (Forbes wealth: US$209.8b) to lead the firm long-term.

There was a risk Tesla could lose Musk’s nous, including his AI smarts (notwithstanding that Musk recently raised US$6b for an independent startup called xAI).

Still not over the line

The compensation package was retooled, and put to a fresh vote, after it passed in 2018 but was struck down by a Delaware judge in 2022. The mega compensation involved shares that Musk could sell after five years.

Today’s decision to support the circa-US$46b compensation did not overturn the judge’s 2022 ruling, according to a Wall Street Journal analysis, but does give Musk’s lawyers ammunition in their ongoing legal fight to reinstate the plan.

Institutional vs retail investor split

According to a New York Times analysis, there was a broad split between institutional investors who opposed Musk’s mega compensation, and retail investors who were largely in favour. That split was reflected here, with the NZ Super Fund’s opposition, and some 50,000 factional Kiwi investors – holding $120m in stock via Sharesies – who were 93 per cent in favour.

As part of his objection to the Delaware judge’s decision, Musk also pushed for Tesla to shift its incorporation from Delaware to Texas – a resolution that also passed today.

“We voted for the move to Texas,” the Guardians of the NZ Super Fund spokesman said.

“We do not believe the proposed reincorporation would materially affect the rights of shareholders.”

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.