*

Musk says shareholders set to approve $56 bln pay package

*

Social media campaign helps garner rare small-investor

support

*

Win for Musk likely despite opposition from major

institutions

By Abhirup Roy

SAN FRANCISCO, June 13 (Reuters) - Elon Musk's army of

small-investor allies took a victory lap with an endorsement for

his $56 billion pay package after the Tesla CEO said

shareholders were voting to approve it by a wide margin despite

opposition from major institutions.

Mom-and-pop investors, who hold an unusually high share of

the electric-vehicle maker, are typically apathetic toward

voting.

But in a rare show of support, many have been campaigning on

social media for weeks for the celebrity billionaire CEO's pay

to be reinstated after a Delaware judge voided it in January

because she found that Musk had improperly controlled the

process.

"An attempt to destroy Tesla foiled by retail shareholders,"

Omar Qazi said in a post on social media platform X after the

update from Musk. "Tesla is saved," said Qazi, who posts from

the handle @WholeMarsBlog and has more than 476,000 followers.

The EV market leader is due to make an official announcement

on the result of the vote at its annual general meeting which

begins at 4:30 p.m. EDT (2030 GMT) on Thursday.

Institutional investors seemed divided on the issue. While some

supported Musk's pay, others such as California Public

Employees' Retirement System and proxy firms Glass Lewis and

Institutional Shareholder Services urged shareholders to reject

the pay package, calling the compensation excessive.

"When both the institutions and the proxy advisory firms are

leaning in one direction, it's very rare for the vote to come

out the other way," John Lawrence, a partner at law firm Baker

Botts, told Reuters. "It shows in this case the company's

understanding of the power of social media."

Backing from retail investors along with support from some

big institutions was key to turning the vote in Musk's favor, a

source familiar with the preliminary tally told Reuters.

"WE HAVE YOUR BACK"

Musk enjoys a global fan base for transforming Tesla from a

startup to a multibillion-dollar behemoth and for innovation at

his other companies including rocket maker SpaceX. But standing

up to powerhouse investors who voted "no" on the pay package

required more than just a fan base.

Social media has been abuzz for weeks with many users, such

as Alexandra Merz, who posts on platform X as @TeslaBoomerMama,

calling on people to vote. The efforts prompted some non-U.S.

banks and brokerages to allow Tesla investors to vote, which was

not previously the case.

"Don't mess with Tesla Retail Shareholders," Merz posted on

Thursday, thanking people who voted. "Your votes will help to

remedy a true injustice."

Musk himself has also been actively wooing their support

with regular social media posts. He had set up a separate

website to educate investors on the proposals, which also

included reincorporating the company in Texas, and on how to

vote.

The company's board sent regular letters to shareholders

highlighting Musk's importance in Tesla and alluding to the

risks of losing his interest if the pay package was rejected.

Musk even offered tours of Tesla's factory to certain investors

who vote.

The plan worked. About 90% of the retail investors who voted

were in favor, Musk said in a post on X over the weekend.

The approval is critical as Musk faces an uphill legal fight to

convince the Delaware judge who said the Tesla board was

"beholden" to him, while Tesla is also potentially fielding

fresh lawsuits over the latest vote. Still, small investors

assured their continued support.

"Shareholders have spoken, again, and hopefully now our

votes can officially count," X user Alicia said in a post.

"@elonmusk, we've always believed in you and will continue to do

so. We have your back!"