Tesla shareholders have given the green light to CEO Elon Musk's $56 billion compensation package, the company announced on Thursday, highlighting significant backing for his leadership amid some resistance from large institutional investors and proxy firms.

The approval showcases the strong support Musk receives from Tesla's retail investor community, many of whom are fervent admirers of the billionaire entrepreneur. This backing comes despite some significant opposition from larger institutional investors.

During the annual shareholder meeting in Austin, Texas, Musk described himself as "pathologically optimistic." He noted that his optimism has been essential to Tesla's existence and success, eliciting applause from the audience. Musk had hinted on Wednesday that the proposals were receiving substantial support.

However, this approval doesn't conclude the ongoing lawsuit regarding the pay package in a Delaware court. In January, a judge invalidated the package, labeling it "unfathomable." Legal experts believe the case could extend for months, and Musk might face new lawsuits concerning the package, which is the largest in US corporate history.

"This issue is far from resolved," said Brian Quinn, a professor at Boston College Law School. The Delaware judge will examine the shareholder vote and require Tesla to prove that the process was free from coercion or undue influence by Musk.

The judge previously criticized Tesla's board, describing it as too closely tied to Musk, both personally and financially. The plan was seen as being proposed by a conflicted board.

On Thursday, shareholders also voted to relocate Tesla's legal home from Delaware to Texas. They approved the re-election of two board members, Kimbal Musk and James Murdoch, despite board opposition to other proposals such as shortening board terms to one year and lowering voting thresholds to a simple majority.

Tesla did not disclose the exact voting results, which are expected in the coming days. Over half a million viewers watched the meeting live on social media platform X, with an additional 40,000 tuning in on YouTube.

"This approval indicates that Tesla's retail shareholders are supportive of Musk's leadership," said Lindsey Stewart, a director at Morningstar Sustainalytics. "The exact vote percentages will be revealing."

The endorsement serves as both a validation of Musk's leadership and a signal that investors are wary of jeopardizing Tesla's future by losing its key executive.

"They are downplaying the risks associated with Musk's pivotal role," said Jason Schloetzer, a corporate governance expert at Georgetown University.

Musk had previously warned of potentially developing AI and robotics outside of Tesla if he didn't secure enough control. He also shifted Tesla's focus from affordable electric vehicles to robotaxis, causing concern among some investors.

During the shareholder meeting, Musk reported that Tesla recently shipped a record 1,300 Cybertrucks in a week and outlined plans for scaling production of its Semi trucks. He also discussed Tesla's autonomous vehicle plans but did not provide a specific timeline.

Tesla's share price has fallen about 55% from its 2021 peak amid slowing EV sales and Musk's divided attention between Tesla and his other ventures. Despite this, the stock rose 2.9% on Thursday.

"Shareholders have reiterated their support for Musk, signaling that they believe he deserves his incentive-based package for meeting ambitious targets," said Garrett Nelson, an analyst at CFRA Research.

"While the vote removes some uncertainty over the stock, we may see a 'sell the news' reaction after recent gains."

The board had argued that Musk's package was justified due to his achievement of aggressive market value, revenue, and profitability goals. However, large investors, such as the California Public Employees' Retirement System, had deemed the package "excessive."

"Elon Musk and Chair Robyn Denholm framed the votes as a test of CEO loyalty, placing immense pressure on shareholders," said Ivan Frishberg, Chief Sustainability Officer at Amalgamated Bank. "However, good governance remains crucial for the company's success, and Tesla's board has consistently shown deficiencies in this area."

Musk's extensive involvement in multiple companies, including SpaceX, X (formerly Twitter), and the AI firm xAI, has raised concerns about his ability to effectively manage Tesla amid its slowing sales and profit growth.