Tesla in last-minute shareholder sprint for huge Musk pay package

Tesla in last-minute shareholder sprint for huge Musk pay package

Tech billionaire Elon Musk is encouraging shareholders in electric automaker Tesla to vote in favor of a plan that includes a massive pay package for the company's founder and chief executive
Tech billionaire Elon Musk is encouraging shareholders in electric automaker Tesla to vote in favor of a plan that includes a massive pay package for the company's founder and chief executive. Photo: Chris DELMAS / AFP
Source: AFP

Electric vehicle company Tesla kept up the campaign to win last-minute votes ahead of a Thursday shareholder meeting that will weigh in on CEO Elon Musk's giant compensation package.

"Tesla stockholders, time is running out," read a special webpage set up by the company for the annual meeting. Voting was set to conclude at 11:59 pm Wednesday on the US East Coast.

Besides a pay package worth as much as $56 billion to the iconoclastic Musk, shareholders will also vote on a plan to shift Tesla's place of incorporation from Delaware to Texas.

"The future value we are poised to deliver for you is at risk," the company says on a website for the annual meeting. "We need your vote NOW to protect Tesla and your investment."

In an effort to coax more shareholder participation, Tesla launched a sweepstakes of sorts where 15 investors who vote would be randomly picked for a tour of Tesla's plant in Austin, Texas personally led by Musk and vehicle designer Franz von Holzhausen.

Read also

Boeing faces deadline to rebut possible US prosecution

Winners will also get choice seats for Tesla's annual meeting, to be held Thursday afternoon in Austin.

PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find the “Recommended for you” block on the home page and enjoy!

The company has employed the Musk-owned X platform, formerly Twitter, to publicize the effort.

Election squeaker

Shareholders overwhelmingly backed the Musk compensation plan in March 2018, but it was struck down by a Delaware judge in January.

This year's vote is expected to be closer than the 2018 referendum after influential advisory firms Investor Shareholder Services and Glass Lewis came out against the windfall, with ISS dismissing the proposal as "excessive."

In April, Tesla revived the package, with Tesla Chair Robyn Denholm imploring investors to "fix this issue" after the Delaware ruling.

"Tesla has been one of the most successful enterprises of our time. In just the past six years, we created more than $735 billion in value," Denholm said in a letter to shareholders.

Read also

Asian markets stutter as investors fret ahead of US releases

"Our next growth vector is equally as ambitious."

The election is going down to the wire, according to the Wall Street Journal, which cited unnamed sources.

"We think investors should buckle up for what could be a volatile week for shares ahead of Tesla's annual meeting on Thursday," said a note from CFRA Research's Garrett Nelson.

Nelson declined to prognosticate on the outcome, but predicted that sufficient support from institutional investors would be crucial. Individual investors, who comprise about 40 percent of Tesla's investor base, are expected to back Musk, he said.

A defeat for the plan could "increase uncertainty regarding the future leadership of the company and jeapordize the 'Musk premium'" should the unpredictable chief executive exit, according to Nelson.

Musk backers, like billionaire investor Ron Baron, have offered unflinching support.

"Shareholders should ask themselves this question: is Tesla better off with or without Elon," Baron said in a public letter.

Read also

Tesla turns up charm ahead of investor vote on huge Musk pay plan

"At Baron Capital, our answer is clear, loud and unequivocal: Tesla is better with Elon. Tesla is Elon."

Among other large shareholders, Vanguard, which holds more than seven percent of shares, declined comment, while BlackRock, which holds around six percent, did not respond to a request for comment.

But other investors including Norges Bank Investment Management, Norway's sovereign wealth fund, have said they will vote no.

So has California State Teachers' Retirement System.

CalSTRS chief investment officer Chris Ailman dismissed the package as "absurd."

Ailman told CNBC that he considers Musk "brilliant," but that the current package is "ridiculous."

"We need to have a serious salary. We'll pay him 140 times the average worker pay," Ailman said. "I think that's more than fair.

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.