Tesla CEO Elon Musk's controversial pay package of $56 billion was approved as shareholders of the electric vehicle (EV) manufacturer voted in favour of it, despite having faced resistance by some large shareholders and proxy firms.
The announcement was made during Tesla's annual shareholder meeting in Austin, Texas, expressing strong support for Musk's leadership and providing motivation to concentrate on his primary source of wealth.
However, the approval from shareholders still does not guarantee Musk what could be the largest pay in US corporate history.
The approval does not settle an ongoing lawsuit regarding the pay package in a Delaware court, which some legal experts believe could continue for months. In January, the judge nullified the pay package, calling it "unfathomable."
Musk might also face new lawsuits over the package, according to experts, as per a Reuters report. Shareholders approved this package in 2018.
"This issue is not resolved," Reuters quoted Brian Quinn, a professor at Boston College Law School.
The Delaware judge will examine the vote closely and will require Tesla to demonstrate that the process was neither intimidated nor improperly influenced by Musk, he added.
The judge criticised Tesla's board as being "beholden" to Musk, stating that the plan was proposed by a board that had close personal and financial ties to the top executive, resulting in a conflict of interest.
Further, Elon Musk's compensation package was structured to reward him with 303 million options to buy Tesla shares at a price much lower than their market value at the time of grant.
Initially valued at $51 billion, reflecting the potential profit Musk could gain if Tesla's stock price increased substantially, the package has seen its estimated worth decrease to $48.3 billion due to a decline in Tesla's stock price since then.
Tesla's stock has fallen by more than 50% from its peak when the company briefly achieved a trillion-dollar valuation in late 2021.
