Tesla is turning to its army of small, loyal shareholders in a bid to secure approval for CEO Elon Musk's massive $56 billion pay package. This comes after major investors and proxy advisors expressed concerns about the compensation plan's size and alignment with Tesla's performance.
The company's upcoming annual meeting on June 13th will be a key moment, acting as a referendum on Musk's leadership. A Delaware court previously struck down the pay package, prompting Tesla to seek shareholder reaffirmation. Musk himself stands to gain significant control over the company if the vote goes his way.
While there are various proposals on the table, Tesla's primary focus is securing a "yes" vote on both Musk's pay and the company's move to reincorporate in Texas. To achieve this, Tesla has launched a multi-pronged outreach campaign targeting retail investors. This includes a dedicated website, engagement with online influencers, and even factory tours for a select group of voters.
While institutional investors have sent mixed signals, with some supporting the package and others opposing it, Tesla seems to be banking on the loyalty and CEO-friendly nature of its individual shareholders. Many small investors believe Musk deserves the hefty compensation for his role in driving Tesla's success. This sentiment is echoed in social media posts from Musk himself, who claims a high approval rate from those who have already voted.
However, experts warn that retail investor apathy could pose a challenge. Historically, a low percentage of individual investors actually participate in voting, despite their potential influence. Tesla faces the task of not only swaying their opinion but also motivating them to cast their vote.
The fairness argument is central to Tesla's campaign. Chair Robyn Denholm emphasizes the importance of respecting Musk's contributions and the need for his continued dedication to the company.
Tesla boasts the highest percentage of "public and other" shareholders – a category encompassing retail investors – among the top 15 S&P 500 companies. This segment holds a significant 43% stake in Tesla, making their vote crucial.
Meanwhile, major proxy advisors have recommended against the pay package, citing its excessive nature. Historically, such recommendations have a significant impact on voting outcomes.
Adding to the uncertainty, some influential Tesla fans online, who often enjoy interaction with Musk, express their doubts about the package's approval chances. They acknowledge Musk's value but also recognize concerns surrounding other factors like slowing sales and stock price decline.
Despite these challenges, Tesla enjoys strong online support from some influential users who have actively encouraged voting participation. Additionally, several non-U.S. brokerages have recently allowed Tesla investors to cast their votes, potentially expanding the pool of participants.
One loyal Tesla shareholder and retired U.S. Air Force officer views the pay package as an already agreed-upon deal and expresses his full support for Musk's leadership.
The upcoming shareholder vote will be a pivotal moment for Tesla and Musk. The outcome will hinge on Tesla's ability to mobilize its retail investor base and overcome opposition from major shareholders and proxy advisors.
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Source: Reuters
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