Future of Elon Musk and Tesla are on the line this week as shareholders vote on massive pay package

If Tesla shareholders vote against restoring Elon Musk's $44.9 billion pay package, there could be several potential consequences for both Musk and the company.

1. Musk could take AI research to other companies: Musk has threatened on his social media platform, X, to develop artificial intelligence elsewhere if he doesn't get a 25% stake in Tesla (he currently owns about 13%). This could potentially mean that Musk's focus on AI and robotics, which he sees as Tesla's future, might shift to his other companies.

2. Musk could walk away from Tesla: There is a possibility that Musk could decide to leave Tesla if his pay package is not restored. This would be a significant loss for the company, as Musk has been instrumental in driving its growth and success in the electric vehicle market.

3. Uncertainty for Tesla: Even if the pay package is reapproved at the annual shareholders' meeting, there could still be uncertainty surrounding Musk's long-term commitment to the company. This uncertainty could impact Tesla's stock price and overall market value, as well as its ability to attract and retain top talent.

4. Potential legal battles: If Tesla shareholders vote against the pay package, it could lead to further legal battles and appeals, as Musk and the company try to find a resolution to the issue. This could be a costly and time-consuming process for both Musk and Tesla.

5. Increased scrutiny on Tesla's board: The controversy surrounding Musk's pay package has drawn attention to Tesla's board of directors, with some questioning their independence from Musk and their decision-making process6. If the pay package is not restored, this scrutiny could intensify, potentially leading to changes in the board's composition or increased pressure from shareholders to address governance issues.

In summary, a vote against restoring Musk's pay package could lead to uncertainty, potential legal battles, and increased scrutiny on Tesla's board, as well as the possibility of Musk taking his AI research to other companies or even leaving Tesla altogether.

Tesla's proposal to move its legal home from Delaware to Texas is primarily driven by a desire to escape the oversight of Delaware courts, which have previously ruled against the company's interests. In January, a Delaware judge invalidated CEO Elon Musk's $56 billion pay package, stating that the process was flawed and the price unfair5. The judge determined that Tesla's board lacked independence from Musk.

By moving its legal home to Texas, Tesla aims to avoid future legal disputes under Delaware law and potentially fall under the jurisdiction of Texas courts, which may be more favorable to the company's interests. Additionally, Musk has expressed a preference for Texas, and the move would align with his vision for the company's future.