The some-$50 billion pay package that made Tesla chief executive Elon Musk one of the richest men in the world will be put to a vote this week after it was shot down by a Delaware court in January for not being “in the best interest” of investors. 

Come this Thursday, Tesla shareholders — from individual investors to billion-dollar Wall Street firms — will determine whether Mr. Musk will hold a pay plan that is 250 times larger than the median compensation of Mr. Musk’s peers, the largest package in corporate America. 

The shareholders will also vote on Tesla’s proposal to move its state of incorporation to Texas, which the company claims is already Tesla’s “business home,” from its current placement in Delaware, a state which currently houses more than 60 percent of Fortune 500 companies.  

The proposed move to Texas comes after Mr. Musk posted on X in response to the January ruling, “Never incorporate your company in the state of Delaware,” adding soon after, “I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters.”

The results of Thursday’s vote may be more symbolic as opposed to holding actual legal power, some legal scholars argue, according to Bloomberg’s reporting. While shareholder approval of Mr. Musk’s compensation package may help for an appeal or a rehearing in a new case, it reportedly cannot overturn the court’s January ruling. 

Rather, the more obvious impact of the vote will be on Mr. Musk’s influence over Tesla as well as his commitment to the company moving forward. 

Mr. Musk has expressed back in January that he would be “uncomfortable” with “growing Tesla to be a leader in AI & robotics without having ~25% voting control.” The voting power, he wrote in a post on X, is “enough to be influential, but not so much that I can’t be overturned.”  

Without such a stake, Mr. Musk writes, “I would prefer to build products outside of Tesla.” Mr. Musk’s other business ventures include the spacecraft company SpaceX, the social media platform X, and most recently, his artificial intelligence company xAI. 

The compensation plan, he wrote in a follow-up post, “is primarily about ensuring the right amount of voting influence at Tesla,” he writes. “At 15% or lower, the for/against ratio to override me makes a takeover by dubious interests too easy.”

Making sure that Tesla retains Mr. Musk’s “attention” and “focus” is a top priority for Tesla board Chairman Robyn Denholm, who implored investors to vote in favor of the salary package in a letter to shareholders released to the public last week.  

“This is obviously not about the money,” she writes, adding that “We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018.” 

However, “Elon is not a typical executive, and Tesla is not a typical company. So, the typical way in which companies compensate key executives is not going to drive results for Tesla,” she argues. “Motivating someone like Elon requires something different.” 

Mr. Musk’s stock option pay package, she argues, will “only serve to incentivize him to continue delivering value to Tesla and our stockholders.”

“Elon is the ultimate ‘key man’ of key man risk,” billionaire Tesla investor Ron Baron said in a letter pledging his support for Mr. Musk’s pay package last week. “Without his relentless drive and uncompromising standards, there would be no Tesla.”

Other shareholders have called for investors to vote against the proposal, expressing their concerns over Mr. Musk’s dedication to the company, the Wall Street Journal reports.  

“Even as Tesla’s performance is floundering, the board has yet to ensure that Tesla has a full-time CEO who is adequately focused on the long-term sustainable success of our company,” the shareholder group, which includes a New York City comptroller, Brad Lander, wrote last week.

In the months leading up to the vote, Tesla launched an unprecedented effort to sway shareholders, including creating a website “VoteTesla.com” meant to motivate investors to vote in favor of the proposal, and even walks them through the process of casting their vote with help of Tesla’s “friendly humanoid robot.”

The company also purchased ad space on Google and X to this same end, as indicated by filings with the Securities Exchange Commission. 

These efforts mark a departure from Mr. Musk’s historic abstention from marketing and public relations. “Other companies spend money on advertising & manipulating public opinion, Tesla focuses on the product,” the chief executive wrote in a post on X back in 2021. 

The salary package at stake was voted on by shareholders back 2018 and gave the businessman stock options to buy 303 million split-adjusted shares of Tesla at the cost of $23.34 a share — which, at the time of the ruling five months ago, was valued at approximately $51 billion.

Mr. Musk’s compensation was later challenged in a suit brought by Tesla shareholders who argued that the board had failed their fiduciary duties of operating in the best interest of shareholders by basing Mr. Musk’s pay package on performance goals that were easier to achieve than the company acknowledged. 

They also argued that many members of Tesla’s board — including Mr. Musk’s brother, Kimbal Musk, and James Murdoch, who is the son of press tycoon Rupert Murdoch and a close friend of Mr. Musk — lacked the independence to decide fairly due to their close personal relationships with the Tesla chief executive. 

The Delaware Chancery Court Chancellor, Kathaleen McCormick, who is the judge on the case, ultimately ruled in favor of the plaintiffs, concluding that the Tesla board “bore the burden of proving that the compensation plan was fair, and they failed to meet their burden,” she wrote in a 200-page decision letter.  

Since the ruling in January, Tesla stock has dropped nearly 30 percent to $175 a share from some-$250 a share back in January, following increased competition in Communist China and diminished interest in electric vehicles. The pay package has thus reduced in value to approximately $41 billion. 

Regardless of Thursday’s result, Mr. Musk will have to wait until the court settles legal fees for the case and issues a final judgment before filing an appeal.