Tesla investor support for Musk’s pay plan declines from 2018 package

Tesla shareholders last week voted to give Chief Executive Officer Elon Musk a record compensation package that could net him about $1 trillion in company stock over the next 10 years. But Musk received less support than his initial pay plan in 2018.

Approximately 66.9% of the shares counted in the vote, excluding shares held by board members and executives, were in favor of the package, according to Friday’s filing. When shareholders voted on the plan in 2018, turnout was 73%, according to an analysis by Andrew Droste, head of corporate governance at investment firm Columbia Threadneedle.

Tesla, which announced preliminary results at its annual shareholder meeting on Thursday, said the plan received support from 75% of its voting shares. The company count also includes insiders like Mr. Musk, who holds about 15% of Tesla stock by proxy and was authorized to vote his shares.

The decline from the previous poll was the result of a tumultuous development for Musk and Tesla. Sales in the first half of this year were sluggish, in part due to Musk’s inflammatory political rhetoric and his efforts to reduce the size of the federal government during the Trump administration. Tesla’s brand value has also declined.

Still, Droste said in an email that the vote, even if just under 70%, represents “broad support for Elon among Tesla’s shareholder base.” Most investors recognize that Tesla and Elon Musk are “inextricably linked,” and “we do not want to jeopardize his possible resignation by failing this vote,” he wrote.

Board members recommended that shareholders approve the pay plan introduced in September. Top proxy voting advisers Glass Lewis and ISS had recommended that investors vote no.

Already the world’s richest person, Musk’s compensation package consists of 12 tranches of stock that will be awarded if Tesla reaches certain milestones over the next 10 years. The first tranche of shares will be paid if Tesla’s market capitalization reaches $2 trillion, about $500 billion above its current valuation. Awards related to market capitalization increases are combined with operational results.

Musk could still collect more than $50 billion by hitting some of the more achievable goals his board has set in its new pay plan. The award terms also include a list of “qualifying events” in which equity can be earned without achieving required operational milestones.

Tesla did not respond to a request for comment.

Correction: An earlier version of this article had incorrect voting numbers in favor of paid packages.

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