Tesla shareholders have approved a $45bn (£35.3bn) pay package for chief executive Elon Musk, following a fiercely contested vote on his leadership. The result, announced on Thursday, hands the billionaire a victory in his fight to retain the largest-ever compensation deal granted to an executive at a US-listed company. Appearing on stage after the vote, Musk said: 'Hot damn, I love you guys!'
The approval comes after a Delaware judge nullified Musk's original pay deal, then worth around $56bn (£43.9bn), in January. The judge ruled that Tesla's board could not be considered independent from Musk's influence and had reached the figure through an illegitimate process. The shareholder vote is seen as a potential rebuttal to that ruling, with Tesla's board arguing that investors were fully informed before casting their ballots.
Despite the victory, the vote does not guarantee that Musk will receive the money. Legal disputes are likely to continue over whether the board can be considered independent and whether the package is fair. New lawsuits could also emerge, potentially bringing the case back before a judge and raising the prospect of a protracted legal battle.
Several prominent investors opposed the deal, including Norway's sovereign wealth fund and the California State Teachers' Retirement System. Proxy advisory firms Glass Lewis and Institutional Shareholder Services also advised against it. Tesla's board had warned that Musk could turn away from the company if the package was not approved.
The original pay package was devised in 2017, with 12 tranches of stock options tied to revenue and market targets. Shareholders approved it in 2018, but a lawsuit followed, alleging that the board had been misleading and the package unfair. Judge Kathaleen McCormick, who oversees Delaware's court of chancery, found the board's process 'deeply flawed' and noted conflicts of interest among Musk's close allies.
Shareholders also approved a measure to move Tesla's legal home from Delaware to Texas, potentially complicating any challenges. Tesla's board, which is likely to appeal McCormick's ruling, put the same deal to a vote, though it is now worth less due to a fall in the company's share price.
