Will Musk fail to collect his pay this week due to opposition from digital tesla shareholders?

Zhitong Finance ·  Jun 11 21:39

The California Teachers Pension Fund, a well-known shareholder of Tesla, has publicly stated that it will vote against CEO Elon Musk's $56 billion compensation plan.

$Tesla (TSLA.US)$A well-known shareholder, the California Teachers Pension Fund has publicly stated that it will vote against CEO Elon Musk's $56 billion compensation plan. As of the date of its most recent fund holdings update, the California Teachers Pension Fund held nearly 4.7 million Tesla shares. Notably, the fund held shares in the company prior to Tesla's listing in 2010. Elon Musk, on the other hand, said that 90% of retail shareholders who have already voted have voted for his compensation plan.

At 4:30 a.m. on Friday, June 14, Beijing time, Tesla will hold its 2024 shareholders' meeting. One of the things that has received much attention is voting on CEO Musk's $56 billion compensation plan. As the CEO of the world's largest electric vehicle manufacturer, Musk never receives a traditional fixed salary; all of his remuneration is linked to the company's market value and performance. Tesla's board of directors granted Musk an incentive stock option worth $56 billion in 2018 as compensation for the next few years, but only if Musk achieves a range of growth and profit goals. However, earlier this year, in 2024, a Delaware judge ruled that there was insufficient disclosure of investor information at the time, and the previous vote was invalidated, so another vote was required.

Wall Street is still divided over the results of this week's vote. Wedbush Securities analyst Dan Ives anticipates that the 2018 package will be approved again, and the former Delaware court ruling will have no practical significance because Tesla will also receive shareholder approval, and the company is registered in Texas. Although Barclays lowered its confidence in the plan after hearing that the Norwegian sovereign wealth fund would vote against it, Barclays also believes that Tesla shareholders will approve Elon Musk's 2018 salary plan.

Meanwhile, Baird warned that the rejection of Musk's compensation package was a reality, in part because many retail investors didn't vote or simply followed the historical trend of proxy recommendations. If rejected, it means Tesla will need to re-publish historical financial data and adjust the number of shares and general administrative expenses downward. However, the company believes Tesla's stock price will drop at least 5% due to the risk of Elon Musk threatening to leave Tesla. Other analysts have also warned that if there is a legal dispute between Musk and the company he founded, stock prices will be volatile.

As of press release, Tesla's stock price fell nearly 2% to $170.39, compared to the previous 52-week trading range of $138.80 to $299.29. The company's stock price has fallen by more than 30% so far this year. Bears against Tesla only account for 3.78% of total tradable shares.


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