A lot of the time, shareholder meetings are boring and not very exciting. In the past, Tesla Inc. meetings have been anything but normal, and this year’s looks like it will be even more of a news story.
Tesla, or TSLA,1.39 percent of shareholders are being asked to vote on Elon Musk’s $56 billion pay package as CEO. They are also being asked to decide if the company, which is based in Texas, should move its state of incorporation there from Delaware. Re-electing two board members is one of the other issues on the ballot.
The company that makes electric vehicles has also done something a little different: it has made a website to get support for its plans. It hopes that its large group of retail investors, who are often die-hard fans, will listen. The meeting is set for June 13, and the voting has already begun.
According to FactSet, the number of institutional investors in Tesla is the thirteenth lowest of all companies in the S&P 500 index SPX.
Danilo Kawasaki has made up his mind. He is the co-founder and CEO of Gerber Kawasaki Wealth and Investment Management in California.
“I voted for Elon’s compensation package because it was already approved and it wouldn’t be fair to change my mind now,” he said. “Elon has done amazing things over the last 10 years, even though the last 12 to 18 months have been way below our expectations.”
In January, a judge in Delaware threw out Musk’s pay package. In a very broad ruling, the judge referred to Mary Shelley, Shakespeare, and “Star Trek” and said that the way the $56 billion amount was calculated was “deeply flawed.”
There are now only about $52 million worth of Tesla shares owned by Gerber Kawasaki. The firm manages about $2.8 billion in assets. There are no client proxies that Gerber Kawasaki votes on. Ross Gerber, the other co-founder of the company, dropped out of the race for a seat on Tesla’s board last year.
Glass Lewis, a proxy adviser, recently spoke out against the CEO pay package, Kimbal Musk’s re-election to the board, and the company’s move from Delaware to Texas.
There are two main independent services that help investors make decisions about important shareholder votes. These are Glass Lewis and Institutional Shareholder Services Inc., though the latter has not yet made its views public.
“The annual meeting of Tesla always gets a lot of attention, but this year it’s much more important because Musk’s pay package and changing the company’s incorporation state from Delaware to Texas are up for vote,” said CFRA analyst Garrett Nelson.
Tesla’s board is worried about the vote, and Nelson said it’s hard to tell which ideas will be approved and which ones will be turned down.
The analyst said, “We don’t want to make a prediction, but we think the vote on Musk’s pay package will be lower than the 73% approval it got in 2018 and that the proxy votes will have big effects.”
Tesla shares trade at a “massive” premium because of Musk’s leadership and ability to come up with new ideas, Nelson said. “If the pay package is voted down, it could make people less sure about the company’s future direction and leadership.”
Musk confirmed the date that the Cybertruck would go on sale at last year’s meeting, and J.B. Straubel, a former longtime lieutenant, was elected to the board. Musk also put an end to rumours that he was going to quit as CEO of Tesla.
The price of Tesla shares has dropped almost 30% this year, making them less stable than the S&P 500 SPX, which has gained about 11% during the same time period.
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