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Elon Musk’s $56 billion pay approved by Tesla shareholders. He says: ‘Hot damn. Love you guys’

Tesla shareholders voted in favor of CEO Elon Musk’s $56 billion compensation package after a Delaware court invalidated it, a company official said. Corporate secretary Brandon Ehrhart said that investors backed the plan based on preliminary vote results at Tesla’s annual meeting in Austin Texas. After this, Elon Musk said, “I just want to start off by saying, hot damn, I love you guys.”

Tesla CEO Elon Musk waves as he leaves the Tesla Gigafactory for electric cars in Gruenheide near Berlin, Germany.(AP)

Gregory Varallo, who represented shareholders who opposed the plan, said, “We believe that the ratification vote that Elon demanded and coerced is deeply flawed as a matter of law, legally ineffective and does not impact our case. We will respond to any arguments raised in due course.”

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Why did the package need approval from shareholders?

The pay package was originally approved by investors in 2018 but was struck down by a Delaware court in January 2024. Following this, Tesla launched a campaign to revive it.

How Tesla’s shares responded to Elon Musk’s pay package vote decision?

Tesla shares rose 0.7 per cent in after-hours trading and stock gained 2.9 percent in Thursday’s session after Elon Musk posted on his social media platform X (formerly Twitter) that investors were going to back his pay plan by a ‘wider margin’.

Does this mean that Elon Musk will get $56 billion compensation?

No, the win strengthens Elon Musk’s appeal of the Delaware ruling but he still needs court approval to get the compensation. Although, the passage of the compensation package likely ensures that Tesla continues to be led by Elon Musk who had hinted that he might step down if he is not given an adequately large stake in Tesla. At the end of 2023, Elon Musk had about 20.5 percent of Tesla shares.

What Elon Musk backers said on his pay package?

Elon Musk backers, like billionaire investor Ron Baron, offered unflinching support for the CEO. In a public letter, Ron Baron wrote, “Shareholders should ask themselves this question: is Tesla better off with or without Elon. At Baron Capital, our answer is clear, loud and unequivocal: Tesla is better with Elon. Tesla is Elon.”

Although some investors like California State Teachers’ Retirement System did not like the package as its chief investment officer Chris Ailman said that he considers Elon Musk “brilliant,” but that the current package is “ridiculous.”

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