Elon Musk celebrates major win after Tesla vote on record-breaking pay package

Wilmington, Delaware - Tesla shareholders have again approved a multi-billion-dollar pay package for CEO Elon Musk, after the deal originally authorized in 2018 was overturned by a court in January.

Tesla CEO Elon Musk is likely to receive a $56-billion pay package after shareholders voted to reinstate a deal overturned by a court.
Tesla CEO Elon Musk is likely to receive a $56-billion pay package after shareholders voted to reinstate a deal overturned by a court.  © REUTERS

The re-approval given at Tesla's annual general meeting on Thursday does not mean Musk will automatically receive the package, as he may still face further legal challenges over the $56-billion deal.

Shareholders also voted in favor of Musk's motion to move Tesla's legal headquarters from Delaware to Texas, the company said after the meeting.

In 2018, a majority of 73% of shareholders voted in favor of granting tech billionaire Musk the share package, which included the right to receive millions of Tesla shares in installments if the company met a number of ambitious targets over up to 10 years.

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However, one shareholder sued against the decision.

A Delaware judge later ruled that Musk, as part of Tesla's board of directors, had too much influence from the sidelines of negotiations on the generous remuneration.

The judge argued that the shareholders had been kept in the dark about his involvement, meaning they didn't have the opportunity to make a considered decision.

Tesla valuation drops as demands sags

Tesla's valuation has dropped by some 50% over the past months as demand for the EV maker's products slowed.
Tesla's valuation has dropped by some 50% over the past months as demand for the EV maker's products slowed.  © REUTERS

The deal on the table provides for Musk to receive some 300 million Tesla shares in installments at the 2018 price if Tesla meets a series of goals over a period of up to 10 years, including an increase of its stock market value from some $50 billion to $650 billion.

Based on this target, the value of the package was once estimated at around $56 billion.

After rapid growth and thanks to the hype surrounding electric cars at the time, Tesla quickly reached the $650 billion target. At times, the company's stock market value even exceeded $1 trillion, meaning Musk's remuneration package was temporarily worth around $100 billion.

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Demand has since slowed down significantly and Tesla is now worth around $580 billion on the stock market.

In recent months, Musk had threatened that he could push ahead with the development of artificial intelligence products elsewhere if he did not get more voting control, which would be granted by the pay package

This triggered a new investor lawsuit in Delaware on Thursday.

Cover photo: REUTERS

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