Elon Musk lobbies X for his $46.5 billion Tesla pay package – Business

Elon Musk, Tesla's chief executive, offered a personal tour of the electric car maker's factory in Austin, Texas, to select shareholders this week.

“Please let us know if you have any questions about voting your Tesla shares!” Mr. Musk wrote On X, his proprietary social media platform.

It's just one of at least a dozen posts Mr. Musk has made on X in recent weeks as Tesla shareholders vote on a $46.5 billion pay package for him.

To promote approval of the package, Mr. Musk shared a sizzle reel X of Tesla vehicles speeding through the desert at dusk. He says he needs enough shares to maintain control over the company, especially as it ramps up its artificial intelligence efforts. And he lashed out at investors who said they would oppose his pay.

“Thanks to all Tesla Vote supporters!” Mr Musk wrote in a post on May 16, following up two days later: “Shareholders have the right to vote their shares!” On Thursday, he said shareholders who voted against him were “oath breakers”.

X's messages indicate how important the pay package is to Mr. Musk after a Delaware judge struck it down in January. The judge ruled in favor of a dissident shareholder who sued Tesla, claiming Mr Musk's compensation was excessive.


Now Tesla is campaigning to get shareholders to re-authorize pay for Mr Musk, who has helped turn the company into the world's most valuable automaker. Tesla is also posting on his behalf, and the company's board has publicly endorsed Mr. Musk's campaign, saying his performance is worthy of compensation.

Mr. Musk turned to his preferred platform, X, to make his case. This is part of a pattern of increasingly using X to the advantage of his other companies. In some cases, he posted support for right-wing heads of state, who later helped secure benefits for Tesla, including lower tariffs and access to critical materials. He uses the site to market milestones at SpaceX, his rocket company, and to introduce new vehicles at Tesla to his 185 million followers.

Mr. Musk's use of X is “both a boon and a curse,” said Eric Talley, a professor at Columbia Law School. “X is a good way to rally the troops.” But, he added, “you want to make sure a lawyer isn't overrunning his own case.”

Corporate governance experts said Mr. Musk's posts on X about his Tesla pay package probably wouldn't run afoul of the law as long as he wasn't misleading shareholders. But a threat he posted in January to take robotics and artificial intelligence ventures outside of Tesla could cause trouble unless he gets 25 percent of the company's voting shares, they added.

In response to a request for comment, a representative of Tesla's board cited a post in which Mr. Musk said he did not need the money but wanted enough control to ensure artificial intelligence was managed responsibly. Mr. Musk did not respond to requests for comment, and X declined to comment.

Tesla's board chair, Robin Denholm, posted a company-backed post website Advocate for his salary package. “Elon has delivered growth that most thought was impossible, and he has created tremendous value for you, the company's owners,” he wrote.

Tesla shareholders first voted on Mr. Musk's pay package in 2018, approving plans to give him an additional 12 percent stake in the company over a dozen years and making him the country's highest-paid executive. According to Securities and Exchange Commission filings, Tesla was valued at $560.2 billion at the market close on Thursday, and Mr. Musk controls 20.5 percent of it. (That figure includes shares that were invalidated by a Delaware court and that Tesla is seeking to reclaim. Without them, its stake is about 13 percent.)

Mr. Musk takes no salary from Tesla. To earn the payout from the company's stock, he had to meet ambitious growth milestones in the company.

But Kathleen McCormick, a Delaware Chancery Court judge overseeing the dissident shareholder lawsuit, struck down the pay package, ruling that Mr. Musk wielded nearly complete control of Tesla's board and essentially approved his own compensation without proper fiduciary management. The judge also ordered him to return his overpayment to Tesla.

In April, Tesla asked shareholders to re-approve Mr. Musk's pay package. The results will be announced at the company's annual meeting on June 13.

Mr Musk often posts about Tesla on X, as the carmaker eschews more traditional marketing. He usually hosts splashy online events to debut vehicles or the company's humanoid robots.

Some of his Tesla posts on X got him in trouble. In 2018, the SEC fined Mr. Musk $20 million for claiming on the platform, then known as Twitter, that he planned to take Tesla private for $420 per share. (Tesla paid a separate $20 million fine.) That price, for which he said he had “secured funds,” was 20 percent higher than where Tesla's stock was trading at the time. Regulators later said he misled investors.

As part of his settlement with the SEC in 2018 over the posts, Mr. Musk was required to run his social media posts by the company's lawyer if the statements contained material information about Tesla. He also resigned as Tesla's chairman of the board.

Mr. Musk later tried to back out of the settlement, saying it violated his freedom of speech. But in 2022, a federal court denied the request. Mr Musk appealed to the Supreme Court, which declined to hear the case in April.

The SEC declined to comment on Mr. Musk's public campaign for his salary.

It is not clear whether the pay package will be passed. Some institutional investment firms, such as Nordea Asset Management, have come out against the pay package in recent weeks. Tesla's shares are down nearly 28 percent this year and the company is behind schedule to release new models. Tesla is also losing customers to Chinese electric car makers.

“Even with Tesla's disappointing performance, 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,” an institutional investor group wrote to shareholders this month. Among the investor representatives is New York City Comptroller Brad Lander, who oversees the city's pension fund.

Glass Lewis, a proxy advisory firm that advises institutional investors on how to vote their shares, recommended this week that Tesla shareholders reject Mr. Musk's package. The firm said its already large stake in Tesla gave it an incentive to perform well, and giving it more shares would dilute other shareholders' stakes.

Glass Lewis' opinion is influential with large asset managers, which in Tesla's case include Vanguard and BlackRock. CalPERS, California's pension fund, also said it would vote against the compensation package.

“Shame on them, they have no respect,” Mr Musk posted in response on Wednesday.

The likelihood of passage of the payroll measure took another blow Friday when Institutional Shareholder Services, which advises institutional investors, recommended against approval.

Even if Tesla shareholders vote to reinstate Mr. Musk's pay, they are unlikely to get a final decision, legal experts said. A Delaware judge has yet to decide whether the vote is enough to reinstate his pay, and the ruling is likely to be appealed.

To avoid a legal challenge, the pay package needs approval from investors representing more than 50 percent of the voting shares not owned by Mr. Musk or his brother Kimball Musk.

Paul Regan, an associate professor at the University of Delaware Law School in Widener, said of Tesla's board: “It may not end the way they think.”

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