Tesla CEO Elon Musk this week offered a personal tour of the electric car maker's factory in Austin, Texas, to select shareholders.
“Let us know if you have any questions about voting your Tesla shares!” Mr. Musk x.com/elonmusk/status/1795471329954537958″ title=”” rel=”noopener noreferrer” target=”_blank”>wrote on x, the social media platform he owns.
It was just one of at least a dozen posts Musk posted on x in recent weeks as Tesla shareholders voted on a $46.5 billion pay package for him.
To encourage approval of the package, Musk has shared on x a video of Tesla vehicles speeding through deserts at dusk. He has said that he needs enough shares of the company to maintain control over it, especially as he steps up his artificial intelligence efforts. And he has lashed out at investors who have said they will oppose his compensation.
“Thank you to all the Tesla vote supporters!” Musk wrote in a post on May 16, and two days later he said: “Shareholders have the right to vote their shares!” On Thursday, he said shareholders who voted against him “broke oaths.”
The messages on x underscore how crucial the pay package is for Musk after a Delaware judge struck it down in January. The judge ruled in favor of a dissident shareholder who had sued Tesla, alleging that Musk's compensation was excessive.
Now Tesla is campaigning to get shareholders to re-approve the salary of Musk, who has helped make the company the most valuable automaker in the world. Tesla has also been posting on his behalf, and the company's board of directors has publicly supported Musk's campaign, saying his performance deserves compensation.
Musk has turned to his preferred platform, x, to make his case. It's part of his pattern of increasingly using x to benefit his other companies. In some cases, he has expressed support for right-wing heads of state, who then helped secure advantages for Tesla, including lower tariffs and access to important materials. He also uses the site to promote milestones for SpaceX, his rocket company, and the introduction of new vehicles at Tesla to his 185 million followers.
Musk's use of x is “a benefit and a curse at the same time,” said Eric Talley, a professor at Columbia Law School. “x is a good way to rally the troops.” But, he added, “it's best to have a lawyer who will make sure he's not ruining his own case.”
Musk's x posts about his pay package for Tesla probably don't break the law as long as he doesn't mislead shareholders, corporate governance experts said. But threats like the one he posted in January about pursuing robotics and artificial intelligence projects outside of Tesla unless he got 25 percent of the company's voting stock could be problematic, they added.
In response to a request for comment, a representative of Tesla's board of directors referred to a post in which Musk said he didn't need the money but wanted enough control to ensure the artificial intelligence was handled responsibly. Musk did not respond to a request for comment and x declined to comment.
Tesla Chairman Robyn Denholm has posted on a company backed by website advocating for your salary package. “Elon has achieved the kind of growth most thought was impossible and has created tremendous value for you, the owners of the company,” he wrote.
Tesla shareholders first voted on Musk's pay package in 2018, approving a plan to give him an additional 12 percent stake in the company over a dozen years and making him the highest-paid executive in the country. Tesla was valued at $560.2 billion at market close Thursday, and Musk controls 20.5 percent of it, according to filings with the Securities and Exchange Commission. (That figure includes shares that have been voided by the Delaware court and that Tesla is seeking to restore. Without them, its stake is about 13 percent.)
Musk does not receive any salary from Tesla. To earn the payments in company stock, he had to complete ambitious growth milestones in the company.
But Kathaleen McCormick, a Delaware Court of Chancery judge overseeing the dissident shareholders' lawsuit, vacated the pay package, ruling that Musk had near-total dominance over Tesla's board and essentially approved his own compensation without proper fiduciary management. The judge also ordered him to return the excess salary to Tesla.
In April, Tesla asked shareholders to re-approve Musk's pay package. The result will be announced at the company's annual meeting on June 13.
Musk often posts about Tesla on x, in part because the automaker avoids more traditional marketing. Typically, he organizes flashy online events to showcase the company's humanoid vehicles or robots.
Some of his Tesla posts about x have gotten him into trouble. In 2018, the SEC fined Musk $20 million for stating on the platform, then known as twitter, that he planned to take Tesla private at $420 per share. (Tesla paid a separate $20 million fine.) That price, at which he said he had “secured financing,” was 20 percent higher than the price at which Tesla shares were trading at the time. Regulators later said he had misled investors.
As part of his settlement with the SEC in 2018 over the publication, a company lawyer required Musk to publish his social media posts if the statements contained material information about Tesla. He also resigned as chairman of Tesla's board of directors.
Musk later tried to get out of the deal, saying it infringed on his freedom of speech. But in 2022, a federal court denied the request. Musk appealed to the Supreme Court, which in April declined to hear the case.
The SEC declined to comment on Musk's public campaign over his salary.
It is unclear whether the salary package will be approved. Some institutional investment firms, such as Nordea Asset Management, have spoken out against the pay package in recent weeks. Tesla shares have fallen about 28 percent this year and the company is behind on launching new models. Tesla has also been losing customers to electric car makers in China.
“Even as Tesla's performance is faltering, the board has yet to ensure that Tesla has a full-time CEO who is adequately focused on the long-term sustainable success of our company,” a group of institutional investors wrote to shareholders. this month. Among the investor representatives was New York City Comptroller Brad Lander, who oversees the city's pension fund.
Glass Lewis, a proxy advisory firm that consults with institutional investors on how to vote their shares, recommended this week that Tesla shareholders reject Musk's package. The company said its already considerable ownership in Tesla gave it an incentive to perform well and that giving it more shares would dilute other shareholders' stake.
Glass Lewis's opinions are influential among large asset managers, which in the case of Tesla include Vanguard and BlackRock. CalPERS, California's pension fund, also said it would vote against the compensation package.
“Shame on them, they have no honor,” Musk posted in response on Wednesday.
The chances of passing the pay measure took another blow on Friday when Institutional Shareholder Services, which also advises institutional investors, recommended against approval.
Even if Tesla shareholders vote to restore Musk's salary, they are unlikely to have the final say, legal experts said. The Delaware judge will still have to decide whether the vote is enough to restore his salary, and the ruling is likely to be appealed.
To survive legal challenges, the pay package needs approval from investors representing more than 50 percent of the voting shares not owned by Musk or his brother, Kimbal Musk.
Paul Regan, an associate professor at Widener University School of Law in Delaware, said of Tesla's board: “This may end up not going the way they think.”
