The Blog

Elon Musk’s $56bn pay approved thanks (possibly) to retail shareholders

Jun 13, 2024 | Corporates, Investors, News

Sarah Penney, Millennial Money Writer 

Over the past few weeks, Tesla has been on an investor engagement drive to get approval on Elon Musk’s $56 billion pay package at this week’s AGM. 

To achieve this, they went on the offensive, with a guerilla campaign to mobilise the support of Tesla’s huge retail investor base (roughly 44%, according to Barron’s).  

The company ran a contest for those who voted ahead of the AGM on 13 June to win a guided tour of Tesla’s factory in Austin, Texas. The lucky 15 shareholders will be hosted by Musk and other executives and will get to see where the Model Y and Cybertruck are built.  

Shareholders who submitted proof of share ownership, and that they had voted, were eligible to be selected to take part in the tour. Tesla made it clear that shareholders shouldn’t disclose how they voted, just proof that they cast their ballot. 

The proposed pay package at the centre of this campaign is the biggest executive compensation deal in history. But, this isn’t the first time Tesla have tried to get it over the line.  

The company claims the pay package was approved by 73% of shareholders in 2018, however it was later voided by a Delaware judge in January this year, on the grounds that the approval process was ‘deeply flawed’.  


Power to the people 


Elon Musk and Tesla took a new approach to getting shareholder support for a company resolution, and it certainly didn’t escape the notice of their huge retail investor base.  

With the widespread media attention, there were calls for investors to halt Musk’s big payday, with proxy advisory firm, Institutional Shareholder Services (ISS) warning that the amount is excessive and that it won’t encourage Musk to focus on the company.  

This comes off the back of claims that Musk has recently been distracted by his other companies, including X and SpaceX. 

On the other hand, the board chair, Robyn Denholm warned that if shareholders didn’t approve the pay package, there was a risk Musk would move on from the business. She said: “Elon is not a typical executive, and Tesla is not a typical company… so, the typical way in which companies compensate key executives is not going to drive results for Tesla. Motivating someone like Elon requires something different.” 

The approval of Musk’s pay package underscores the pay-off from properly engaging with retail investors. Retail are loyal and amassing such a huge retail investor base has many upsides for companies.  

A significant upside in this case is that Tesla stock surged 7% in premarket trading, following the announcement that the pay package had been approved by shareholders.  


Attitudes towards executive pay 


This is the first time we’ve really seen the attitudes of younger investors towards large executive pay packages be tested. Tesla’s retail shareholder base is huge, but there’s an assumption that it trends towards the younger generations, where there’s a sense of super-fandom around the company and Elon Musk. 

Our own research tells us that while share price is the main driver behind people from the Gen X and Baby Boomer generations investing in specific companies, for Gen Z, socially responsible and environmental factors are more of a motivator when considering buying shares.  

This allows us to speculate that Tesla’s younger investors are bought into the company’s vision, and therefore keen to back the founder.  


For investor engagement advocates, this innovative approach must be applauded. At the very least, it will have opened the eyes of many to the power and influence of retail shareholders, and how they can use that power to enact change.  

It will be fascinating to see how other companies, both in the US and the UK, learn from the Tesla campaign. It should highlight the power and loyalty of retail investors and inspire others to invest in more inclusive and proactive engagement. 


Sarah Penney is TEA’s Millennial Money Writer, covering personal finance and investing from the perspective of a young millennial building a career, travelling the world and navigating the world of investing. She explores subjects that promote understanding of markets, investment trends, and macroeconomics, through her lense. 

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