Elon Musk’s 46 billion dollar pay package wins Tesla shareholders’ approval

There have been several large payouts totalling almost 1 billion dollars in current currency in the history of corporate compensation packages in the United States. However, none compares to the 46 billion dollars in compensation that Tesla’s shareholders gave CEO Elon Musk on Thursday.

A standing ovation was given by shareholders present at Tesla’s annual meeting on Thursday at the company’s Austin, Texas, headquarters following the announcement of the vote results, which were completed today. In a post published late on Wednesday via his social media site X, Musk declared the victory, stating that shareholders were choosing to approve the compensation plan by “wide margins.”

According to a regulatory filing, 72% of voting shares supported the package, excluding those voted for by Musk and his brother Kimbal. This compensation plan has sparked debate, with critics labelling it excessive, while supporters believe it ensures Musk remains with Tesla. The stock rose by 3% following the announcement, reflecting investor confidence in Musk’s continued leadership.

Despite the approval, questions remain due to a previous Delaware court ruling that struck down Musk’s 2018 pay deal. Tesla shareholders also approved moving the company’s legal jurisdiction to Texas, potentially influencing future court decisions regarding the payout.

Musk’s compensation from Tesla comes through performance-based stock options rather than a base salary. His overall wealth includes significant stakes in Tesla, SpaceX, and other businesses, totalling $203 billion. Some shareholders support the pay package to prevent Musk from leaving, while others, like California’s State Teachers Retirement System, oppose it due to its magnitude and potential dilution of shares.

The debate over whether large CEO pay packages lead to better performance continues. A 2017 MSCI study found that companies with smaller equity incentives outperformed those with larger packages by nearly 39% over a decade.



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