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Elon Musk wins shareholder vote in battle over $56bn pay deal

Elon Musk
Elon Musk tweeted that his pay deal was passing by a wide margin - Britta Pedersen-Pool/Getty Images

Tesla boss Elon Musk won a major victory on Thursday night in his long-running battle to secure a historic $56bn (£44bn) pay deal.

In results announced at Tesla’s annual general meeting, shareholders voted in favour of the pay package, although Mr Musk could still face legal battles over it.

Earlier in the day, the billionaire had tweeted that shareholders were set to approve his huge pay packet by “wide margins”.

This pushed the shares in Tesla up by as much as 7pc to hit a two-month high.

Approval for the huge pay deal – the largest in history for a US chief executive – is a significant win for both the billionaire and the company, which has seen its share price fall 60pc from its 2021 peak amid slowing EV sales.

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Dan Ives, analyst at investment firm Wedbush, described the outcome as a “pop the champagne moment for Musk and Tesla shareholders”.

He added: “In a nutshell, if this proposal went south, a lot of bad things and scenarios could have happened - including Mr Musk beginning a path to not being chief executive of Tesla.”

The incentive package was originally approved by shareholders in 2018 but was struck down in January by a judge in Delaware, who said investors were not fully informed of key details.

Court judge Kathaleen McCormick said the package did not meet the standard of a “fair price”, branding its size “unfathomable”.

Influential advisory firms Investor Shareholder Services (ISS) and Glass Lewis both came out against the windfall, with the former dismissing the proposal as “excessive”.

Major investors, including Norway’s sovereign wealth fund, also said they would vote against the pay deal.

But Mr Musk and Tesla’s board intensely lobbied shareholders – especially retail investors – to back the proposal. The Tesla chief also threatened to quit if investors did not approve his pay.

Supporters of the deal included Scottish investment giant Baille Gifford and Ron Baron, a long-time Tesla investor, who said in an open letter that there would “be no Tesla” without Mr Musk.

Under the plan, Mr Musk was eligible for as much as $55.8bn in stock options if Tesla hits certain milestones, which the company has reached.

Investors also approved other proposals, including the move of its legal headquarters from Delaware to Texas, as well as the re-election of Mr Musk’s brother Kimbal and James Murdoch, son of media mogul Rupert Murdoch, as board members.

Shareholder approval is seen as a crucial step in challenging the Delaware ruling.

Alexander Potter, an analyst with Piper Sandler, said: “This doesn’t fully settle the matter; the compensation package can still be deemed illegal.

“But a Delaware judge previously struck down the package citing limited shareholder disclosure, and given enhanced disclosures preceding this vote, it’s unclear why anyone would take issue with this newly-ratified deal.”