The approval underscores the support that Musk enjoys from Tesla's retail investor base, many of whom are vocal fans of the mercurial billionaire. The proposal passed despite opposition from some large institutional investors and proxy firms.
Onstage at the annual shareholder meeting in Austin, Texas, Musk described himself as pathologically optimistic. "If I wasn't optimistic this wouldn't exist, this factory wouldn't exist," Musk said to applause. "But I do deliver in the end. That's the important thing."
He had tipped off late on Wednesday that the proposals were garnering huge support.
The approval does not, however, resolve a lawsuit on the pay package in a Delaware court, which some legal experts think could stretch out for months. The judge invalidated the pay package in January, describing it as "unfathomable."
Musk may also face fresh lawsuits on the package, which would be the largest in U.S. corporate history. Shareholders had voted for this package in 2018.
"This thing is not over," said Brian Quinn, a professor at Boston College Law School. The Delaware judge will scrutinize the vote and require Tesla to prove the process was not coerced or improperly influenced by Musk, he said.
The judge had criticized Tesla's board as "beholden" to him, saying the plan was proposed by a conflicted board with close personal and financial ties to its top executive.
On Thursday, shareholders also approved a proposal to move the company's legal home to Texas from Delaware. They also approved other proposals including the re-election of two board members: Musk's brother Kimbal Musk and James Murdoch, son of media mogul Rupert Murdoch.
Shareholders did increase the level of investor control by passing proposals in favor of shortening board terms to one year and lowering voting requirements for proposals to a simple majority, despite board opposition to both.
'DEAL IS A DEAL'
Tesla on Thursday did not disclose the voting tallies, which are expected to be revealed in coming days. At least a half-million viewers watched the meeting on the livestream on social media platform X, and about 40,000 watched on YouTube.
"This is, firstly, a message that Tesla's retail shareholders do approve of what's going on. It will be interesting to see what the exact percentages of the votes are," said Lindsey Stewart, a director at Morningstar Sustainalytics.
Shareholder approval for the compensation serves as both an endorsement of Musk's tenure and an acknowledgment that investors do not want to risk the company's future.
"They are brushing aside essentially key man risks, where Tesla has become even more dependent on Musk going forward," said Jason Schloetzer, a business professor at Georgetown University with expertise in corporate governance.
In January, Musk threatened to build AI and robotics products outside of Tesla if he failed to gain enough voting control.
He shifted the company's focus to robotaxis, shelving cheaper mass-market electric cars, to the concern of some investors who feared the autonomous technology will be hard to perfect.
In an update on Tesla's performance, Musk said on Thursday that the company recently shipped a record 1,300 Cybertrucks in a week and that plans for volume production of its Semi trucks were in place. He talked at length about plans for autonomous cars, though he gave no time frame for a launch of self-driving vehicles.
Tesla's share price has dropped about 55% from its 2021 peak as EV sales have slowed and Musk's attention has wavered between Tesla and other companies he runs. The stock closed up 2.9% on Thursday.
"Shareholders once again endorsed the terms of the contract, sending a strong signal that 'a deal is a deal' and Musk deserves to be rewarded for meeting the lofty thresholds of an entirely incentive-based contract," said Garrett Nelson, analyst at CFRA Research.
"The news lifts a major overhang on the shares, although we wouldn't be surprised by a "sell the news" reaction on Friday following big gains over the past two trading sessions as the likely outcome became clearer."
The board had said that Musk deserves the package because he hit all the ambitious targets on market value, revenue and profitability. Large investors including the California Public Employees' Retirement System had called the pay package "excessive."
PRESSURE
"Elon Musk and Chair (Robyn) Denholm have made this about CEO loyalty and presented the votes as a decision about whether the company can keep Musk," said Ivan Frishberg, chief sustainability office at Amalgamated Bank.
"That is a lot of pressure but it doesn't change the fact that good governance is good for the bottom line of a company, and the Tesla board is consistently and clearly deficient on that front."
While Musk is undoubtedly Tesla's driving force, and is credited with much of its success, the company's sales and profit have slowed. There are concerns that he is spreading himself too thin.
Musk has added two more companies to his roster since the pay package was approved in 2018. He now runs or owns six firms, including rocket-builder SpaceX, social media giant X - formerly Twitter - and the artificial-intelligence firm xAI, which Musk created in 2023.
