“Welcome to Texas! “Tesla’s house.” With those words began the shareholders’ meeting of the electric car giant, held this Thursday in an atmosphere of worship for the figure of Elon Musk. The shareholders present at the Tesla factory in Austin, some of whom had won attendance in a raffle, wildly applauded the two most controversial proposals: ratifying a stratospheric remuneration for Musk of around $50 billion and moving the legal domicile of the company from Delaware to Texas. The shareholders have approved both proposals, as announced by the secretary of the board. The delirium arrived when Musk, the charismatic leader, appeared on the scene. The standing shareholders have acclaimed him.
Elon Musk had already tweeted the day before that both proposals had received broad support from shareholders, but it was during the meeting that it became official. The company’s CEO began his speech just after the approval of the proposals was announced and appeared in a good mood.
“We have the most impressive shareholder base. It is simply incredible for any listed company,” she said. “We have a big shareholder meeting here to recap the company’s accomplishments and tell you where we’re going. And I think it’s amazing. I think we’re not just opening a new chapter for Tesla. “We are starting a new book,” she stated.
A valuation of more than 20 billion
“Where things are going: I think it’s just going to be absolutely mind-blowing. Obviously, we are making great progress in solving the sustainable energy problem with electric vehicles and with solar-powered stationary storage. And then, I think in terms of company value, what’s funny to me is just such a mind-blowing thing that, as has been said, you understand, but I think most of the world still doesn’t understand,” he said. expanded. “Talking to a lot of the big institutional investors, they’re often in New York, and they don’t drive cars. So it’s like, ‘Have you driven our car? Have you tried self-driving, you know, version 1, 2, 3?’ And they’re like ‘Oh, no.’ ‘Well, you should try it. That would be a good thing to do. And if you just plot the points on the curve of how autonomy progresses, and you just believe in the curve, it is heading towards unsupervised self-driving, very quickly, at an exponential rate,” he continued.
The entrepreneur has a vision in which the autonomous car is a mix of Uber and Airbnb, in which the driverless car acts as a taxi and vehicle owners can add them to the fleet when they do not need them. “Tesla will take a portion of the revenue. But most of the money will go to the car owner. And this is what is really going to work, this is what is going to happen. Remember my words. This is simply a matter of time. I admit that I am a little optimistic sometimes, but if I were not optimistic, this would not exist, this factory would not exist”, he has continued.
The tycoon spoke to shareholders next about the development of humanoid robots like Optimus, which he hopes will be used for manufacturing tasks, as a company, to take care of children… They can generate an annual profit of one billion dollars annually for the company has assured. Using a value multiplier of 20 or 25 times that profit, he has argued, the company could be worth $20 or $25 billion in the future just for that line of business and $5 or $10 billion more for the autonomous car. “I think it’s really conceivable, it’s within the realm of possibility that Tesla could reach a valuation 10 times that of the most valuable company today,” he said. Just this Thursday, Apple has once again surpassed Microsoft and has become the company with the highest market capitalization, with 2.29 trillion dollars.
The approved proposals
The most controversial proposal on the agenda was to support an unprecedented multi-million dollar compensation to Elon Musk. It was already approved by the board, but a Delaware judge annulled it for having been launched with a process tainted by cronyism and conflicts of interest. The shareholders present in Austin, however, were delighted to ratify this extraordinary award for the company’s success. All the income, gross operating profit and market capitalization milestones to which the remuneration was subject (and which were very ambitious) have already been met.
In 2018, Tesla estimated the value of Musk’s compensation package at $2.28 billion, already a record, but the actual amount increased as the stock appreciated. The bonus consists of options to acquire 303,960,630 shares, valued at the current market price ($182.5 per share) at $55.5 billion. As the exercise price of these options is $23.34 per share, the implicit benefit would now be valued at around $46.4 billion (€48.4 billion).
The fact that the remuneration has been supported by the shareholders does not completely clear the way for it to be made effective. It remains to be seen whether the judge who annulled it now considers it valid. The vote also helps Musk win a hypothetical appeal to a higher court.
The other star proposal was the transfer of the company’s legal domicile to Texas, where its operational headquarters is, from Delaware, where it is now incorporated and registered. For it, not only the majority of the board was needed, but the majority of all the capital, but it had also been reached in the early vote, according to Musk.
Large U.S. companies overwhelmingly choose Delaware for its flexible, business-friendly legislation, tax advantages, and its entire pro-business ecosystem, including regulation and dispute resolution mechanisms. Musk, however, came away scalded by Delaware’s seriousness in corporate matters. When he signed the agreement to buy Twitter and then wanted to back out with excuses that did not hold up, the company’s lawsuit against him to enforce what was signed had all the signs of succeeding. Finally, Musk gave up and went ahead with the operation. After purchasing the company, he moved the corporate headquarters to Nevada. It was also in Delaware where the judge annulled his stratospheric compensation. After that failed, Musk set up a poll on his social network in which his followers voted in favor of the transfer.
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