Tesla share price rises as stockholders approve Elon Musk’s $2.6bn compensation plan

Tesla shareholders have approved a proposal to award chief executive Elon Musk with stock options valued at $2.6bn (£1.8bn) at a special meeting today.

The windfall does not include a salary or cash bonus, so it relies on a rise in the company’s market value over the next decade.

Shares in the company rose 3.42 per cent to $321.18 following the news.

Earlier this month proxy advisory firm Institutional Shareholder Services (ISS) recommended investors reject the proposed package, saying it was an “unprecedented” award.

However, Reuters reported that a Tesla spokesperson confirmed a majority of shareholders had voted for the measure at the company’s meeting in Fremont, California. The spokesperson did not disclose the number of votes for or against the proposal.

Ahead of the meeting, one of Tesla’s biggest shareholders told Reuters the pay plan was “well aligned with shareholders’ long-term interests”.

The award includes stock options that vest in 12 tranches. Tesla’s market value must increase to $100bn for the first tranche to vest, and it must rise in additional $50bn increments for the rest. As of yesterday’s closing price, Tesla was valued at nearly $52.5bn according to Thomson Reuters data.

Read more: Elon Musk’s $2.6bn payout rejected by US pension giant ahead of crunch vote