Tesla CEO Elon Musk said shareholders are voting to approve his $56 billion pay package and move the electric vehicle company to reincorporate in Texas from Delaware.
"Both Tesla shareholder resolutions are currently passing by wide margins! Thanks for your support!!," Musk posted on X late Thursday, sharing graphics that showed both votes had met the threshold to pass.
Tesla shares moved up 6.6% in premarket U.S. trading on Thursday on news that shareholders were giving a vote of confidence in Musk's leadership, after rising 3.9% the day before.
But even if Musk wins the vote, he must still fight in court to convince the Delaware judge who said the Tesla board was "beholden" to him, while potentially facing new lawsuits over the outcome.
TESLA ASKS SHAREHOLDERS REINSTATE ELON MUSK'S PAY, MOVE TO TEXAS
"Even if the shareholders do approve the old package, it is not clear that the Delaware court will allow that vote to be effective," Adam Badawi, a law professor at UC Berkeley told Reuters.
The outcome of the vote will be announced at Tesla's headquarters at 4:30 p.m. on Thursday.
Reuters reported that big institutional investors joined with retail investors to push the "yes" votes over the line, citing sources familiar.
Major proxy firms Glass Lewis and Institutional Shareholder Services (ISS) had urged shareholders to reject the pay package, and large investors including Norway's sovereign wealth fund had said they would vote against it.
The results are not official until Tesla starts its annual meeting and shareholders are allowed to change their votes until that time.
ELON MUSK DROPS LAWSUIT AGAINST OPENAI
Tesla shareholders also voted on a proposal to move its legal headquarters from Delaware to Texas and to re-elect two board members: Musk's brother Kimbal Musk and James Murdoch.
Texas Gov. Greg Abbott congratulated Musk after his post, saying on X: "Welcome to a state that has neither a personal nor a corporate income tax."
Should Musk’s payout go through, it would be the largest for a chief executive in corporate America.
Tesla's board of directors proposed the reinstatement of the pay package, which has no salary or cash bonus and offers rewards in the form of stock options that are awarded based on Tesla's market value rising to as much as $650 billion over the 10 years following 2018. The company is currently valued at about $571.6 billion, according to LSEG data.
WORLD'S LARGEST WEALTH FUND TO VOTE AGAINST MUSK'S $56 BILLION PAY PACKAGE
Tesla has urged shareholders to reaffirm their approval of Musk's compensation plan. In an interview with the Financial Times earlier this month, Tesla board chair Robyn Denholm said that Musk deserves the pay package because the company hit ambitious targets for revenue and its stock price.
However, Glass Lewis, a major American proxy advisory services company, last month urged Tesla shareholders to reject the staggering package, citing its "excessive size," the impact of Musk exercising the stock options and the concentration of the company's ownership.
It also cited Musk's "slate of extraordinarily time-consuming projects" which have increased following the acquisition of Twitter, now known as X, where Musk serves as chief technology officer and executive chairman. Musk is also the CEO of SpaceX and artificial intelligence firm xAI, and is the founder of Neuralink and The Boring Company.
Musk has served as Tesla CEO since 2008 and has helped drive the EV-maker's rise to the most valuable automaker in terms of market capitalization. He brought the company from a $2.2 billion loss in 2018 to a $15 billion profit and has increased vehicle production by a factor of seven, according to the Vote Tesla campaign website.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The company has faced headwinds amid a cooling of consumer interest in EVs, with Tesla reporting a sales volume decline in the first quarter for the first time in nearly four years.
Delaware Judge Kathaleen McCormick invalidated the compensation package in January, ruling that the "unfathomable sum" was unfair to shareholders and negotiated by directors who appeared beholden to Musk.
The shareholder vote won't automatically reverse McCormick's decision. Musk and Tesla may yet face months of litigation before a final decision is reached.
Fox Business' Michael Dorgan, Eric Revell and Reuters contributed to this report.
