Elon Musk may take home much less than $56 billion historic pay owing to this reason

Elon Musk is now worth $48.3 billion as of Thursday’s market close owing to a steady decline in Tesla share price this year.

Tesla shareholders re-approved a pay package for CEO Elon Musk worth billions which was thrown out by a court in January this year. The shareholders also voted to move Tesla to Texas. Elon Musk's compensation package, 303 million options to buy Tesla shares at a drastically reduced price, was worth $51 billion five months ago. It is now worth $48.3 billion as of Thursday’s market close owing to a steady decline in Tesla share price this year. The company's share price has slid by more than half from its peak as a trillion-dollar company in late 2021.

Elon Musk arrives at the 10th Breakthrough Prize Ceremony at the Academy Museum of Motion Pictures in Los Angeles. Tesla CEO Musk's massive pay package that was thrown out by a Delaware judge has been approved by the company's shareholders. (AP)

Tesla said that it must keep the pay package in place to keep Elon Musk fully engaged in running Tesla and not focus on his other companies as he is also the head of SpaceX, Neuralink, the Boring Company and the owner of social media platform X, formerly known as Twitter.

Tesla Chair Robyn Denholm wrote in a letter to shareholders, “This is obviously not about the money. We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018. Elon is not a typical executive, and Tesla is not a typical company. This is about what will motivate him to continue to create value for stockholders.

She added, “What we recognized in 2018 and continue to recognize today is that one thing Elon most certainly does not have is unlimited time. Nor does he face any shortage of ideas and other places he can make an incredible difference in the world. We want those ideas, that energy and that time to be at Tesla, for the benefit of you, our owners. But that requires reciprocal respect.”

Other supporters of the pay package included Cathie Wood, CEO and chief investment officer of Ark Invest and Ron Baron, CEO of Baron Capita. The latter said in a recent statement, “Elon is the ultimate ‘key man'. Without his relentless drive and uncompromising standards, there would be no Tesla.”

Those who voted against the deal include the California State Teachers Retirement Fund which said, “While we appreciate the significant value generated under Mr. Musk’s leadership since the grant date in 2018, we remain concerned about the total size of the award."