This article is more than 2 years old

This article is more than 2 years old

Elon Musk, the billionaire founder of the electric car company Tesla, has won approval for a new pay deal that could land him a $55.8bn (£40bn) bonus, smashing all compensation records.

Tesla’s shareholders voted to approve Musk’s pay deal at a meeting in Fremont, California, despite warnings from corporate governance experts who have called the package “staggering”. They have also questioned why someone whose wealth is already tied to Tesla’s fortunes needs more shares.

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In order to trigger the maximum payout Musk, 46, would have to build Tesla into a $650bn company over the next 10 years – making it one of the world’s most valuable tech companies. The company is currently valued at $54.6bn.

Musk, whose fortune Forbes currently estimates at $20bn, will have his compensation tied entirely to Tesla’s success. Supporters have argued it will help keep Musk focused on the company at a time when he is also increasingly involved in SpaceX, his space exploration company, and other ventures.

“Elon will receive no guaranteed compensation of any kind – no salary, no cash bonuses, and no equity that vests by the passage of time,” the company said of the new pay plan in January. “Instead, Elon’s only compensation will be a 100% at-risk performance award, which ensures that he will be compensated only if Tesla and all of our stockholders do extraordinarily well.”

But while the company’s largest shareholders approved the plan, corporate governance groups Glass Lewis and Institutional Shareholder Services (ISS) came out strongly against it.

“The cost of the grant is staggering relative to executive compensation levels among public companies worldwide,” Glass Lewis said.

ISS said it worried the deal “locks in unprecedented high-pay opportunities for the next decade, and seemingly limits the board’s ability to meaningfully adjust future pay levels in the event of unforeseen events or changes in either performance or strategic focus.”

As part of the plan Musk will be granted share options of $2.6bn. The award will pay out in 12 tranches and will depend on the company hitting a series of revenue and market capitalization targets. Musk will collect additional stock grants if the company increases its market capitalization.

In order to receive the highest award, Tesla would have to be worth more than 12 times as much as General Motors, the US’s largest car manufacturer, is today ($52.9bn).