The last annual shareholders meeting was a high-stakes event that saw investors approve CEO Elon Musk’s controversial pay package a second time and green-light a move from Delaware to Texas. Under Texas law, Tesla is required to hold an annual meeting within 13 months of the last one, which was held on June 13, 2024. Tesla notified investors about the meeting and set a July 31 deadline for shareholders to submit proposals. 

Harvard professor of law and economics John Coates told Fortune Texas law provides that companies like Tesla are to hold annual meetings, and that any shareholder can demand one in court if one has not been held within 13 months.

“It’s not a crime, however, to fail to have one, and there is no particular penalty for waiting until a shareholder demands one,” he said. Calling Tesla’s delay “illegal” would be misleading, he explained.

However, it’s “certainly not normal to not hold a meeting within 13 months,” said Coates. “Usually it’s small and under-resourced or distressed companies that fail to do so,” he said.

Meanwhile, Tesla has yet to file a proxy statement—which informs shareholders of the meeting agenda and items to be voted on—that would likely answer swirling questions about Musk’s controversial compensation. To refresh: His pay package was structured as a moonshot mega grant initially valued at $2.6 billion before soaring along with shareholders’ fortunes as high as $56 billion. It was to be the highest compensation ever awarded to the CEO of a publicly traded company. However, an investor challenged it in court, and Delaware Chancery Court Judge Kathaleen St. J. McCormick rescinded it twice—even after Tesla investors approved it a second time last year. 

As it stands, it’s unclear how the Tesla board will proceed with paying Musk, a prerogative for keeping him engaged at Tesla amid his other competing interests and companies, board chair Robyn Denholm has said. Tesla has faced serious pressure from investors over Musk’s work with President Donald Trump’s Department of Government Efficiency (DOGE) and later Musk’s bitter bust-up with Trump. That followed with Musk announcing he would create a third political party, the “America Party.” The announcement led to a selloff in Tesla shares, which led to $15 billion being wiped from Musk’s net worth. 

Following the announcement of the meeting date, a few of Tesla’s investors were underwhelmed. 

In a statement, New York City Comptroller Brad Lander said the announcement was a “welcome, if belated, recognition that the rule of law applies to everyone—even the world’s richest man and his company.

“The basic corporate governance rules are not optional; they are fundamental protections for shareholders and public markets,” said Lander. 

Lehigh County Controller Mark Pinsley, a member of the Lehigh County Pension Board, which voted last May to halt any new investments in Tesla in the county’s actively managed funds, said Musk’s political ambitions have turned Tesla, a once transformative company, into a cultural fault line. 

“It’s time he stepped aside,” Pinsley told Fortune. “His growing entanglement in politics, including his flirtation with launching a new political party, makes Tesla a proxy for ideological battles rather than a company focused on serving its workers or customers.”

Pinsley said Tesla “benefits enormously” from simply being part of the S&P 500, meaning index funds are compelled to keep investing in the stock. It creates artificial demand that is largely unrelated to fundamentals such as revenue, innovation, or governance, he said. 

“I understand the long-term promise of autonomous taxis,” said Pinsley. “However, we’re still years away from them generating significant revenue, so the [price-to-earnings ratio] remains way out of whack with the underlying fundamentals.”

Plus, Tesla has become a lightning rod, he said, more divisive than visionary, which is a shame for a company that once held real promise to shape society, Pinsley added.

“Tesla isn’t riding on innovation right now, it’s riding on inertia,” he said. “Its place in the S&P 500 keeps demand for its stock artificially high, regardless of performance.”