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Tesla Defends $56 Billion Pay For Elon Musk In Upcoming Vote

Elon Musk at Viva Technology (Vivatech) 2023

Tesla bosses are still pushing for a massive pay deal for CEO Elon Musk, despite shares have dropping 28 percent this year.

The company is warning of slower growth as sales in its second-largest market, China, decline. 

A defect led to a recall of its latest product, and CEO Elon Musk's focus is often split among his various ventures. 

Despite this, Tesla is pushing for the approval of Musk’s record-breaking $56 billion pay package.

A vote will be held at its annual meeting on Thursday.

Musk's pay package in 2018 is the largest ever for a US executive.

employer

It is based on targets for Tesla’s stock value, revenue, and profitability. 

These targets were met by 2022 due to significant surges in Tesla production, electric car demand, and share price.

This transformed Tesla into the world's most valuable carmaker and Musk into one of the richest people in the world.

In January, a Delaware court voided the pay package after a shareholder challenge.

The judge called it "an unfathomable sum" and questioned its necessity for retaining Musk and achieving company goals. 

Tesla organized a re-vote and emphasized the previous performance targets the package was tied to.

Tesla’s chair, Robyn Denholm, argued Musk hadn't been paid for six years of work that generated significant growth and stockholder value. 

She called the court's decision "fundamentally unfair" and inconsistent with shareholder support in 2018.

The upcoming vote is seen as an endorsement of Musk’s pay and a referendum on his leadership. 

Musk has not been paid for six years

Denholm warned shareholders that failing to back the pay package could risk Musk stepping back from Tesla.

She urged them to support the deal to retain his time, energy, and vision.

Investors will vote on two proposals: Musk’s pay and relocating Tesla’s incorporation from Delaware to Texas. 

Objections have been made by proxy advisory firms Glass Lewis and ISS, which called the pay "excessive."

However, analysts like Dan Ives believe Tesla will secure approval, though not by a wide margin.

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Musk and Tesla have mounted a high-profile campaign to ensure support. 

Musk shared a video on X (formerly Twitter) urging investors to "protect Tesla" by voting for the proposals.

Musk’s leadership has its critics.

Trade unions are pushing for better worker pay.

There are concerns over his divided focus among his various ventures, including SpaceX, Neuralink, the Boring Company, and X. 

Despite these issues, many believe Musk deserves the pay package for driving the global electric vehicle transformation.

Victory on Thursday may not end the controversy, as opponents of Musk’s pay deal are expected to challenge any effort to reinstate it.

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