Tesla shareholders have endorsed a record-breaking compensation package for CEO Elon Musk and approved the relocation of the company’s legal headquarters to Texas.

This development marks a significant victory for Musk, who had vigorously campaigned for the payout, potentially worth up to $56 billion (£43.9 billion) depending on Tesla’s share price. Earlier this year, a judge in Delaware had blocked the deal, citing concerns about its fairness to shareholders.

Addressing an enthusiastic crowd at Tesla’s annual meeting in Texas, Musk expressed his gratitude, saying, “Hot damn, I love you guys.” The compensation deal is estimated to be 300 times what the highest-paid executive in the US earned last year.

However, the shareholders’ vote is non-binding, and legal experts are uncertain if the Delaware court, which initially blocked the deal, will recognize the re-vote and reinstate the pay package. “The vote changes nothing,” said Mathieu Shapiro, managing partner at Obermayer Rebmann Maxwell & Hippel. He added that it might influence future court decisions but noted that it remains to be seen if another court will consider the vote post-trial.

The substantial compensation had drawn criticism and concerns about Tesla’s board being overly compliant with Musk. In January, Delaware judge Kathaleen McCormick described the package as “unfair” and criticized the decision-making process, which involved a board heavily influenced by Musk. She pointed out the close personal relationships between Musk and some board members, such as Antonio Gracias, who often vacationed with Musk’s family, and Todd Maron, Tesla’s former general counsel and Musk’s former divorce attorney.

Musk announced his intention to move Tesla’s legal headquarters to Texas following the Delaware court’s decision to void his pay package, which was prompted by a lawsuit from a small investor. This battle over the compensation plan has highlighted concerns about Musk’s leadership, especially as Tesla’s share price has declined from its peak and the company’s position in the electric vehicle market faces increased pressure.

Despite these challenges, Musk successfully rallied support from individual investors, a significant portion of Tesla’s shareholder base. Car industry analyst Karl Brauer described the shareholder support as a “pretty ringing endorsement” of the package, noting that Musk secured more than enough backing to justify it. The company did not immediately disclose the margin of the vote.

Musk had hinted at the vote’s outcome on his social media platform, X (formerly Twitter), and shares in Tesla closed up nearly 3% following his announcement.

The compensation plan grants Musk rights to approximately 300 million shares, equivalent to a 10% stake in the company, as a reward for Tesla achieving specific goals related to sales, profits, and share price, outlined in 2018.

Tesla had claimed that the goals set for Elon Musk’s compensation package were challenging. However, the initial lawsuit that led to the Delaware court blocking the pay deal argued that these targets were merely internal growth projections shared with banks.

“My understanding is that there’s been about 1,100% appreciation in Tesla stock. And that’s pretty, pretty impressive. Most chief executives have never done anything like that,” said car industry analyst Karl Brauer.

Georg Ell, former director of Western Europe at Tesla, commented on whether Musk deserved such a substantial payout on the BBC’s Today programme: “If I was an investor who put a substantial amount of money into this in 2018 and had held it throughout the period, I’d be very happy because I would have seen anywhere between 13 and 16 times my money back. That’s a very, very good return,” he added. Ell also disclosed that he has a small shareholding in Tesla, worth around £6,000.

Tesla’s board maintained that Musk deserved the compensation package because the company had achieved its targets under his leadership, and it was necessary to keep him committed to the firm. Ell noted that the vote’s outcome provided Musk with “a very strong validation.”

“At Tesla, of course, he doesn’t do it all alone, but he definitely sets the agenda, he sets the pace, and he is a relentless person to work for, there’s no doubt about that,” Ell said.

Tesla executives expressed their support for the package on social media, emphasizing Musk’s crucial role in the company’s success. Meanwhile, Musk promised a personal tour of Tesla’s Texas factory to some shareholders who participated in the vote.

In addition to approving the compensation package, shareholders also re-elected two board members during the meeting: James Murdoch, the son of media mogul Rupert Murdoch, and Musk’s brother, Kimbal Musk.