Tesla CEO Elon Musk gave select shareholders a personal tour of the company's factory in Austin, Texas, this week.
“If you have any questions about voting Tesla stock let me know!” Musk wrote on his social media platform, X.
This is just one of at least 12 posts Musk has made to X in recent weeks as Tesla shareholders vote on a $46.5 billion compensation package for Musk.
To encourage approval of the package, Mr. Musk posted a photo of his Tesla car speeding through the desert at sunset on X. Mr. Musk has said he needs enough stock to maintain control over the company, especially as it ramps up its efforts in artificial intelligence. He has also blasted investors who have voiced opposition to his compensation.
“Thank you to everyone who voted for Tesla!” Musk wrote in a May 16 post, and added two days later, “Shareholders have the right to vote their shares!” On Thursday, he called shareholders who voted against him “violators of their pledge.”
X's message underscores how important Musk's compensation package is after a Delaware court in January voided his compensation. The court ruled in favor of dissenting shareholders who had sued Tesla alleging that Musk was excessively compensated.
Tesla is currently campaigning to get shareholders to re-approve Musk's compensation for building the company into the world's most valuable automaker. Tesla has posted on Musk's behalf, and the company's board has publicly backed his campaign, saying his work merits a payday.
Musk has used his favorite platform, “X,” to make his case, part of a pattern of increasingly using it to benefit other companies. He has also posted support for right-wing heads of state that later helped secure benefits for Tesla, including lower tariffs and access to critical materials. He also uses the site to promote milestones for his rocket company, SpaceX, and new Tesla car launches to his 185 million followers.
Eric Tully, a professor at Columbia Law School, said Musk's use of X is “both a blessing and a curse. It's a good way to rally his people together,” but added that Musk “needs to have his lawyers check that it's not going to jeopardize his case.”
Corporate governance experts said Musk's posts on X about his Tesla compensation package are unlikely to run afoul of the law unless they misled shareholders, but threats like his January threat to work on robotics and artificial intelligence ventures outside of Tesla unless he bought 25% of the company's voting stock could be problematic, they added.
In response to a request for comment, a representative for Tesla's board of directors referred to a post in which Musk said he didn't need money but wanted enough control to ensure artificial intelligence was handled responsibly. Musk did not respond to a request for comment, and Company X declined to comment.
Robin Denholm, Tesla's board chairman, defended his compensation package in a post on a company-sponsored website: “Elon has delivered growth most people thought was impossible and created tremendous value for you, the owners of the company,” Denholm wrote.
Tesla shareholders first voted on Musk's compensation in 2018, approving a plan to grant him an additional 12% of the company over 12 years, making him the highest-paid executive in the U.S. Tesla's market capitalization was $560.2 billion as of Thursday's close, of which Musk owns 20.5%, according to filings with the Securities and Exchange Commission.
Musk doesn't receive a salary from Tesla, and was required to hit ambitious growth targets to be paid in company stock.
But Delaware Chancery Court Judge Katherine McCormick, who is hearing the shareholder lawsuit, found that Musk had near-total influence over Tesla's board of directors and essentially approved his own compensation without proper fiduciary control, invalidating the compensation package. The judge also ordered Musk to return excess compensation to Tesla.
Tesla asked shareholders in April to re-approve Musk's compensation package, with the outcome due to be announced at the company's annual meeting on June 13.
Mr. Musk posts frequently about Tesla on X, in part because the company has eschewed traditional marketing. He typically hosts flashy online events to unveil cars and the company's humanoid robots.
Some of his posts about Tesla on X got him in trouble. In 2018, the SEC fined Musk $20 million for claiming on the platform, then called Twitter, that he planned to take Tesla private at $420 a share. (Tesla paid a separate $20 million penalty.) The price at which he said he had “secured funding” was 20% higher than Tesla's shares were trading at the time. Regulators later said he misled investors.
As part of a settlement with the SEC in 2018, Musk was required to have social media posts reviewed by company lawyers if they contained material information about Tesla, and he also stepped down as chairman of the Tesla board.
Musk later tried to withdraw from the settlement, arguing it violated his free speech rights, but a federal court denied the request in 2022. Musk appealed to the Supreme Court, which declined to hear the case in April.
The SEC declined to comment on Musk's public compensation campaign.
It's unclear whether the compensation package will pass. Several institutional investors, including Nordea Asset Management, have opposed it in recent weeks. Tesla's shares have fallen about 28% so far this year, and the company is behind schedule in launching new models. Tesla is also losing customers to Chinese electric-car makers.
“Despite Tesla's underperformance, the board has yet to ensure that Tesla has a full-time CEO who is sufficiently focused on the company's long-term, sustainable success,” a group of institutional investors, whose representatives include Brad Lander, the comptroller who oversees New York City's pension funds, wrote to shareholders this month.
Glass Lewis, a proxy advisory firm that advises institutional investors on how to vote stocks, recommended Tesla shareholders this week reject Mr. Musk's proposal, arguing that his sizable stake gives him an incentive to perform well and that giving him more stock would dilute the holdings of other shareholders.
Glass Lewis' opinions are influential among big asset managers, which in Tesla's case include Vanguard and BlackRock Inc. California's pension fund CalPERS also said it would vote against the compensation package.
“Shame on them, they have no honor,” Musk posted in response on Wednesday.
Even if Tesla shareholders vote to reinstate Musk's pay, they likely won't have the final say, legal experts said. A Delaware judge will have to decide whether there were enough votes in favor of restoring his pay, and the decision is likely to be appealed.
To survive legal challenges, the compensation package would need to be approved by investors representing at least 50% of the company's outstanding shares not belonging to Musk or his brother, Kimbal Musk.
“This may end up going in a different direction than they thought it would,” Paul Regan, an associate professor at Delaware Law School, said of Tesla's board.
