What is this waxy build up around the thermostat of my hot water heater?

Hot water has not been as warm nor lasting as long. When cover was removed to inspect the element, a waxy build up has "melted" down around the electrical connectors from the top of the heater. Some of the connectors are corroded. This is not on the bottom section (2nd element) Is it supposed to be there? What does this mean? Is it fixable?