Tesla Shares Surge as Musk Expects Approval of $56B Compensation Package

KEY TAKEAWAYS

Tesla CEO Elon Musk announced that shareholders are likely to approve his controversial $55.8 billion pay package at Thursday's annual meeting.

Musk also mentioned that the vote to move Tesla's incorporation from Delaware to Texas is expected to pass.

The compensation package was initially approved by investors in 2018, but a Delaware judge deemed it excessive and nullified it earlier this year.

Tesla (TSLA) shares surged on Thursday after CEO Elon Musk revealed that indications suggest his contentious $55.8 billion pay package would be approved when the votes from the shareholder meeting are counted.

**Musk's Pay Package Had Been Struck Down by Delaware Judge**

Shareholders were asked to reapprove the plan, which they originally endorsed in 2018. However, a Delaware judge overturned it in January, labeling the payment, the largest in corporate history, as excessive.

Musk's supporters argue that he is the driving force behind Tesla's success. Ron Baron, founder and CEO of Baron Capital, expressed in an open letter to investors that Musk has "earned his pay" and emphasized, "Tesla is better with Elon. Tesla is Elon."

Critics, however, highlight Tesla's declining stock price, which had dropped nearly 29% this year due to slowing demand for EVs, prompting the company to reduce prices. They also claim Musk is too distracted by his other ventures, including X and SpaceX, instead of focusing on Tesla.

The final vote results will be disclosed at the shareholder meeting held at Tesla's headquarters in Austin, Texas, at 3:30 PM Central Time.

Tesla shares rose 7.7% to $190.85 by 10:09 a.m. ET on Thursday.

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MicroStrategy plans to purchase additional bitcoin and is raising $500 million in debt to finance the acquisition. The company is offering $500 million in convertible senior notes to institutional buyers. MicroStrategy currently holds approximately $14 billion worth of bitcoin on its balance sheet.

MicroStrategy (MSTR) is looking to add more bitcoin (BTC) to its holdings and is raising $500 million in debt to facilitate the purchase, along with other corporate purposes, the company announced Thursday.

The debt offering consists of convertible senior notes due in 2032 and will be open to qualified institutional buyers (QIBs), with a 13-day option for initial investors to acquire up to an extra $75 million in notes. These unsecured senior notes will bear interest semiannually, starting Dec. 15, 2024, till maturity, unless they are repurchased, redeemed, or converted at a prior date.

**MicroStrategy's Bitcoin Bet**

MicroStrategy has become infamous for its bitcoin-focused strategy in recent years, led by its former CEO and current Executive Chairman Michael Saylor.

As of April 26, the company owned 214,400 bitcoins that at today's prices, assuming no change in the size of the holding, would be valued at roughly $14 billion. Any bitcoin purchases in the second quarter would make it 15 consecutive quarters of the company buying the cryptocurrency.

Though other companies such as Tesla (TSLA), Block (SQ), and, more recently, Semler Scientific (SMLR) have confirmed buying crypto, none has a bitcoin hoard even close to the size of MicroStrategy's.

And, to that effect, stocks of none of the other bitcoin-investing companies exhibit correlation with bitcoin prices as much as MicroStrategy stock does. While the price-trend lines for bitcoin and MicroStrategy seem to move in tandem, MicroStrategy stock has raced ahead of the cryptocurrency since February, coinciding with the company's Feb. 26 announcement of adding 3,000 bitcoins to its portfolio.

Year-to-date, bitcoin prices have gone up roughly 50%, while MicroStrategy stock has more than doubled.

However, that correlation also works in a negative way. The bitcoin price is down roughly 6% over the past week, despite a short-lived recovery following the release of Wednesday's Consumer Price Index (CPI) data for May. MicroStrategy stock dropped 9% over the same period.

The final results of the votes will be revealed at the shareholder meeting being held at 3:30 PM Central Time at Tesla’s Austin, Texas, headquarters.

Tesla shares surged 7.7% to $190.85 as of 10:09 a.m. ET Thursday.