Tesla shareholders vote in favor of $56 billion compensation for Elon Musk after court rejects it

Tesla shareholders approved Elon Musk’s $56 billion compensation package Thursday during his annual meeting of shareholders.

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The results were greeted with cheers from the shareholders present.

In 2018, Tesla agreed pay Musk a multi-billion dollar compensation based on performance, provided the company is worth $56 billion over a 10-year period. However, a Tesla shareholder filed a lawsuit against the company over the huge payout and a Delaware Court spoke out against Musk, rejecting the payment plan in January.

What happened to Elon Musk’s salary in January?

Chancellor Kathaleen McCormick found that Tesla’s board had simply accepted Musk’s own proposal for his salary, “the largest potential compensation plan in the history of public markets”, and thus violated its obligations to Tesla shareholders.

Additionally, McCormick also found that shareholders were misinformed and misled about a number of factors related to Musk’s compensation.

This substantial compensation could have been maintained if Tesla’s board could prove it was fair, or if most minority shareholders had been “fully informed” when they approved it. However, the court also found that not only had the shareholders not been fully informed, but they had actually been misinformed about key factors in the decision-making process.

Musk then criticized this decision.

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“Never incorporate your business in the state of Delaware,” Musk said job the X in January following the Delaware court overturned his salary. “I recommend incorporating in Nevada or Texas if you prefer to have shareholders decide matters.”

Tesla shareholders also approved Tesla’s redomestication from Delaware to Texas at the meeting.

A vote of confidence in the Tesla tumult

Tesla had a difficult 2024. The company had to issue a reminder and halting production of its new Cybertruck after the discovery of a design flaw that caused some drivers’ gas pedals to lock up when accelerating. Furthermore, faced with a to slow down electric car sales and poor quarterly results, Tesla licensed approximately 10 percent of its entire workforce.

The day before the annual shareholder meeting, where voting will continue on shareholder resolutions, including Musk’s pay package, Musk claims on X, the vote was already in his favor.

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“Both Tesla shareholder resolutions are currently largely adopted!” Musk said. “Thanks for your help!!”