Abhirup Roy
SAN FRANCISCO (Reuters) – Elon Musk’s army of small investor allies scored a victory on Thursday as the Tesla (NASDAQ:) CEO won a critical shareholder vote on his $56 billion pay package despite opposition from major institutions.
Small investors with an unusually high stake in the electric vehicle maker tend to be indifferent to the vote.
But in an unusual show of support, many have campaigned for weeks on social media to restore the celebrity billionaire CEO’s salary after a Delaware judge vacated it in January because she found Musk had improperly overseen the process.
“We have the most incredible shareholder base,” Musk said at a shareholder meeting after the vote was announced. “Damn it, I love you guys,” he told a roaring and cheering crowd of investors at the Tesla plant in Austin, Texas.
Support from retail shareholders, as well as support from some large institutional investors, was key to turning the vote in Musk’s favor, a source familiar with the preliminary count told Reuters on Wednesday, after the CEO posted on social media platform X that the proposal collected a huge number of votes. support.
“Tesla retail shareholders are not just passively adding shares to their portfolio. They are involved in the management and development of the company,” Omar Qazi said in a post on X from the handle @WholeMarsBlog. “They vote. They tell their friends about it. It’s not just about investment. This is a movement,” said Qazi, who has more than 476,000 followers.
Institutional investors are divided on this issue.
While some supported Musk’s salary, others, such as the California Public Employees’ Retirement System and trust firms Glass Lewis and Institutional Shareholder Services, called on shareholders to reject the pay package, calling the compensation excessive.
“When both institutions and trusted advisory firms lean in one direction, very rarely does the vote go the other way,” John Lawrence, a partner at law firm Baker Botts, told Reuters. “In this case, it shows the company’s understanding of the power of social media.”
“WE ARE BEHIND YOUR BACK”
Musk has a global fan base for turning Tesla from start-up to giant, as well as innovation at his other companies, including rocket maker SpaceX. But it took more than just a fan base to stand up to the powerful investors who voted “no” on the pay package.
Social media has been buzzing for weeks with many users like Alexandra Merz posting on X under the name @TeslaBoomerMama urging people to vote. The effort has prompted some non-U.S. banks and brokerages to allow Tesla investors to vote, something they had not previously done.
“Don’t mess with Tesla retail shareholders,” Merz, who attended the meeting and received a standing ovation from investors for her efforts, wrote on X. “Your voices will help correct real injustices.”
Musk himself also actively enlists their support with regular posts on social networks. He created a separate website to inform investors about the proposals, which also included a reorganization of the Texas company, and how to vote.
The company’s board of directors regularly sent letters to shareholders emphasizing Musk’s importance to Tesla and hinting at the risks of losing his participation if the compensation package was rejected. Musk even offered a tour of the Tesla factory to some voting investors.
The plan worked. About 90% of retail investors who voted voted in favor, Musk said in a post on X over the weekend.
The approval is critical as Musk faces an uphill legal battle to convince a Delaware judge who said Tesla’s board is “obligated” to him, while Tesla could also file new lawsuits over the latest vote. However, small investors have assured of their continued support.
“Shareholders have spoken again and hopefully our votes can now officially count,” user X Alicia wrote in her post. “@elonmusk, we have always believed in you and will continue to believe in you. We will support you! “