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Tesla Shareholders Back Elon Musk’s $55.8B Pay Package

Tesla Inc. Chief Executive Elon Musk has received a vote of approval from the US electric vehicle (EV) giant’s shareholders for his substantial 2018 pay package, signaling continued support for his leadership.

The backing for the $55.8 billion compensation plan came after Delaware judge Kathaleen McCormick rejected the award in January due to the lack of evidence proving shareholder fairness and findings of it being improperly arranged by the company’s board of directors.

The billionaire entrepreneur’s package is the largest ever granted to a US firm executive.

Shares in the Austin, Texas-based carmaker ended Thursday’s session 2.92% higher at $182.47 following the news and gained 0.13% to $182.70 in after-hours.

The stock is still nursing a 27% loss this year and has dropped around 55% from its 2021 high as the company faced weaker EV sales and intense competition from Chinese rivals.

In addition to the compensation, Tesla received the green light from its shareholders to relocate its official home to the Lone Star state from Delaware and reappoint Musk’s brother, Kimbal Musk, and James Murdoch as board members.

Musk’s Pay Package Legal Battle Not Over

While the shareholder endorsement does not overrule the Delaware court’s decision, it marks a major public relations (PR) win for Musk and the EV maker’s board, which may aid in an appeal or building a new case.

The support for Musk’s pay plan also showed confidence among the company’s retail investors in his manner of running the car giant after he warned in January to develop artificial intelligence (AI) and robotics outside the firm if he could not secure a 25% voting control.

The exact percentages of the pay vote have not been revealed, although they are expected to be publicly available in the coming days. Tesla agreed that it was uncertain how the vote to reapprove the compensation would be perceived under Delaware regulation.

If an appeal fails, moving the firm’s state of jurisdiction to Texas would help the board re-propose the compensation to a new state court, where it may gain favor.

The pay package vote will not automatically grant Musk the $55.8 billion award, and the company might need to expect future legal conflicts. The board’s independence is still being questioned, and legal concerns over the plan’s fairness following McCormick’s ruling in January remain.

Furthermore, Musk and the vote may face potential lawsuits, which could reopen the case, reinforcing the possibility of a lengthy legal fight.

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