Written by Abhiroop Roy
SAN FRANCISCO (Reuters) – Elon Musk's army of small investor allies scored a victory on Thursday as the Tesla (NASDAQ:) CEO won a crucial shareholder vote on his $56 billion pay package despite opposition from major institutions.
Wealthy investors, who own an unusually high stake in the electric car maker, are typically apathetic about the vote.
But in an unusual show of support, many have been campaigning on social media for weeks to reinstate the famous billionaire CEO's pay after a Delaware judge struck it down in January because he found Musk had improperly controlled the process.
“We have the most amazing shareholder base,” Musk said at the shareholder meeting after the vote was announced. “Fuck, I love you guys,” he told a crowd of investors at the Tesla factory in Austin, Texas.
A source familiar with the initial tally told Reuters on Wednesday that support from individual shareholders along with support from some large institutional investors was a key factor in shifting the vote in Musk's favor, after the CEO reported on the social media platform X that the proposal had huge revenues. supports.
“Tesla retail shareholders are not just passively adding shares to their portfolio. They are participating in the management and development of the company,” Omar Qazi said in a post on X by @WholeMarsBlog. “They are voting. They are telling their friends. It's not just about investing. It's a movement,” said Qazi, who has more than 476,000 followers.
Institutional investors were divided on this issue.
While some supported Musk's pay, others such as the California Public Employees Retirement System, proxy firms Glass Lewis and Institutional Shareholder Services urged shareholders to reject the pay package, calling the compensation excessive.
“When institutions and proxy consulting firms lean in one direction, it is very rare for the vote to come out the other way,” John Lawrence, a partner at law firm Baker Botts, told Reuters. “In this case it shows the company understands the power of social media.”
“We support you”
Musk has the global fan base for transforming Tesla from a startup into a giant and for innovating at his other companies including rocket maker SpaceX. But standing up to the powerful investors who voted “no” on the pay package requires more than just a fan base.
Social media has been buzzing for weeks with users like Alexandra Merz, who posts on X as @TeslaBoomerMama, calling on people to vote. These efforts prompted some non-US banks and brokerage firms to allow Tesla investors to vote, which was not the case before.
“Don't mess with Tesla retail shareholders. Your voices will help address real injustice,” Mears, who attended the meeting and received a standing ovation from investors for her efforts, posted on X.
Musk himself has also been actively wooing their support with regular posts on social media. He had created a separate website to educate investors about the proposals, which also included reincorporating the company in Texas, and how to vote.
The company's board has sent regular letters to shareholders highlighting Musk's importance to Tesla and noting the risks of losing his involvement if the pay package is rejected. Musk even offered Tesla factory tours to some of the investors who voted.
The plan worked. About 90% of retail investors who voted were in favor, Musk said in a post on X over the weekend.
Approval is crucial as Musk faces an uphill legal battle to convince a Delaware judge who said Tesla's board is “beholden” to him, while Tesla may also file new lawsuits over the latest vote. However, small investors assured their continued support.
“Contributors have spoken again, and hopefully our votes will now officially be counted,” X user Alicia said in a post. “@elonmusk, we've always believed in you and we'll continue to do so. We support you!”