Elon Musk, Tesla’s chief executive, has received shareholder backing to reinstate his $56 billion pay package — the biggest in American corporate history.

Tesla confirmed that proposals to ratify Musk’s pay deal and move the company’s legal home to Texas had been approved by shareholders, who chanted “Elon Musk, Elon Musk” after the preliminary results were revealed at the company’s annual meeting at its headquarters in Austin, Texas.

Speaking to shareholders after the results were announced, Musk said: “Hot damn, I love you guys.”

Musk has been fighting to get his hands on the payout, first agreed in 2018, after a judge in Delaware, where Tesla is presently incorporated, voided the pay deal in January over concerns about the board’s transparency and independence when it was approved.

Musk and Tesla’s board have spent two months trying to convince shareholders to declare their backing for the deal, to bolster their chances of a successful appeal to the Delaware ruling.

The vote has been interpreted on Wall Street as a test of confidence in Musk’s leadership of Tesla. Shares in the carmaker have dropped about 60 per cent from their 2021 peak as EV sales have slowed, leading to criticism that Musk’s attention has been too divided between Tesla and his other companies. Tesla’s board has argued that Musk deserves the package because he hit all the ambitious targets on market value, revenue and profitability.

Shares in Tesla jumped 2.9 per cent, or $5.18, to close at $182.47 on Thursday after Musk said preliminary voting showed the key proposals had been approved by “wide margins”.

Receiving shareholder backing is a significant boost to Musk, who this week faces allegations that he pursued several female employees at his company SpaceX for sex. Musk has not responded to the allegations, published in a detailed report by the Wall Street Journal.

However, even with investors’ support, he faces a battle to secure legal approval for the payout. “Even if the shareholders do approve the old package, it is not clear that the Delaware court will allow that vote to be effective,” said Adam Badawi, a law professor at UC Berkeley ahead of the annual meeting.

Robyn Denholm, Tesla’s chair, had suggested that Musk would leave the company if investors voted against the pay deal and urged shareholders to ensure that he continues to be motivated to devote his energy and vision to the business. Meanwhile, Musk had threatened to build AI and robotics products outside Tesla if he failed to gain enough voting control, which requires the 2018 pay package to be approved.

The record-breaking payout divided shareholders. Those in favour included Ron Baron of Baron Capital, who said Musk, with his “relentless drive and uncompromising standards’, was integral to Tesla.

Baillie Gifford & Co, the Scottish asset manager, and Ark Investment Management, the investment firm run by famed American fund manager Cathie Wood, have also backed the deal. Norges Bank, Norway’s sovereign wealth fund, and the California Public Employees’ Retirement System had said they would vote against the chief executive’s proposed pay.

Glass Lewis and Institutional Shareholder Services, the shareholder advisory firms, had also urged investors to reject the pay package.

Daniel Ives, a technology analyst at Wedbush Securities, said the vote was a “pop-the-champagne moment for Musk and Tesla shareholders”. In a note on Thursday, Ives said: “In a nutshell, if this proposal went south, a lot of bad things and scenarios could have happened, including Musk beginning a path to not being CEO of Tesla. Instead, it’s roses and rainbows today in Austin, although demand challenges remain and this is a pivotal period for Tesla.

“Tesla is Musk and Musk is Tesla. Shareholders spoke loud.”