Tesla rises premarket after Musk says shareholders voting yes on $56 bn pay plan

June 12, 2024 11:44 PM EDT
(Updated - June 13, 2024 6:45 AM EDT) --Shares in Tesla (NASDAQ: TSLA) moved higher in premarket U.S. trading on Thursday after CEO Elon Musk said in a social media post that shareholders are backing his $56 billion pay package and a move by the electric vehicle giant to reincorporate in Texas from Delaware.

Tesla shareholders are voting on Musk’s controversial pay package -- the largest in U.S. corporate history -- and the reincorporation in Texas this week. The results are due to be unveiled at a meeting at Tesla's headquarters in Texas on Thursday.

"Both Tesla shareholder resolutions are currently passing by wide margins! Thanks for your support!!," Musk said in a post on X.

Reuters has also reported a similar trend in early voting, citing a source familiar with the preliminary tally.

"We expect the stock to respond favorably to this news, though the upside is perhaps unlikely to be as violent as the downside would have been, had shareholders rejected the deal," analysts at Piper Sandler said in a note to clients.

Musk’s pay deal was struck down by a Delaware judge earlier this year after a slew of lawsuits and complaints from shareholders. This week’s vote will decide its reinstatement, as well as Tesla's reincorporation in Texas after Musk criticized unfavorable conditions in Delaware.

Several major Tesla shareholders have already made their positions clear. Norges Bank Investment Management, Nordea Asset and two California pension holders have signaled they intend to reject the package, while Tesla bull Baron Capital, Cathie Wood’s Ark Invest and the Florida State Board of Administration have said they will vote in favor of the resolution.

Barclays analysts said in a recent note that failure to approve Musk’s pay package represented a major downside risk for Tesla, given that Musk had led the company to a $1 trillion valuation in recent years.

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