You’re here (TSLA) and its chief executive Elon Musk have each fired their own salvos at institutional investors seemingly reluctant to greenlight a controversial $58 billion compensation package for the electric vehicle giant’s boss. Musk himself said a key investor in Tesla stock had “no honor.”
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Tesla wrote a detailed letter to shareholders on Wednesday, responding to a report from proxy advisory firm Glass Lewis on Elon Musk’s 2018 pay package, which remains controversial six years after it was initially agreed. The investor group released a report Saturday saying Musk’s pay deal was “excessive” and citing its “dilutive impact” on current shareholders. Glass Lewis also opposed Tesla’s proposal to reincorporate in Texas from Delaware.
The automaker sent a response to Tesla stock holders on Wednesday, alleging that Glass Lewis “omits key considerations, uses flawed logic, and relies on speculation and assumptions,” according to federal documents. The company wrote that Musk’s leadership in less than six years has generated more than $735 billion in market value for Tesla shareholders.
“Elon has officially acknowledged that the 2018 Performance Award has inspired and motivated him to help Tesla achieve this extraordinary growth,” Tesla wrote. “Glass Lewis may think Elon should have done it with more ‘focus,’ but the fact is Tesla’s performance speaks for itself.”
Meanwhile, Marcie Frost, chief executive officer of the California Public Employees’ Retirement System, told CNBC on Wednesday that she would vote against approving Musk’s pay package. The group, known as CalPERS, is the largest public pension fund in the United States by assets.
After the interview, Musk posted on X that CalPERS “broke the deal.”
“Shame on them, they have no honor,” he wrote.
Tesla: getting votes
Tesla asked shareholders on April 17 to ratify Elon Musk’s 2018 salary plan, despite the plan being overturned by a Delaware court earlier this year. The electric vehicle giant has been trying to mobilize votes from its retail investor base. Retail or individual investors currently own about 30% of Tesla shares.
Musk’s compensation deal is currently valued at around $45 billion.
The vote comes after a Delaware judge ruled against the 2018 package, ruling that it was excessive and unfair to Tesla investors. The judge criticized the “extensive ties” between Musk and Tesla board members.
Tesla Chairman Robyn Denholm and other Tesla executives plan to spend the next few weeks traveling around the world to build shareholder support, according to the Wall Street Journal. In 2018, Tesla’s board won approval of Musk’s 2018 salary package with 73% of the vote.
Voting has been open for a few weeks. Tesla’s board of directors recommended voting “yes” on both Texas reinstatement and Musk’s compensation. The annual meeting of shareholders is scheduled for June 13.
Institutional investors own a much larger share of Tesla stock than in 2018. Vanguard voted against Musk’s pay package in 2018, while BlackRock and many others supported it.
Eight institutional investors have announced their opposition to Musk’s pay package, according to federal regulatory filings. Investors include Amalgamated Bank, New York City Comptroller, Nordea Asset Management, AkademikerPension and SOC Investment Group, among others.
Glass Lewis is one of two major proxy solicitation firms. The other is Institutional Shareholder Services, or ISS. The group did not weigh in on Musk’s salary deal or his reinstatement in Texas. In 2018, the ISS recommended voting no on the salary agreement.
Tesla Stock Performance and Tesla Voting
TSLA shares rose 0.6% to 177.27 in market trade THURSDAY. Reuters reported Thursday morning that Tesla was preparing to register fully autonomous driving, or FSD, with Chinese regulators.
After registration, Tesla can ask its employees to test the FSD on public roads in China. The company may then offer it as an upgrade to its customers in the coming months, according to Reuters.
Tesla stock edged down 0.3% to 176.19 on Wednesday. TSLA shares fell 3.9% in May and about 30% so far this year.
However, Tesla has recovered since its report first quarter results and turnover on April 23, finding support at its 50-day moving average, according to MarketSurge Analysis. On April 22, Tesla stock hit a 52-week low of 138.80.
Adam Jonas, a leading auto analyst at Morgan Stanley and a Tesla buyer, wrote last week that “while investors debate whether the CEO’s commitment is less or more, we believe Elon needs more than ever of Tesla.
“We encourage investors to pay close attention to the June 13 shareholder vote,” Jonas said. “While it is impossible to predict the outcome, we believe the event could result in significant volatility in the stock.”
Tesla stock ranks eighth in the 35-member IBD Automotive Manufacturers Industry Group. The title has a low 39 Composite score on a best possible 99. Stocks have a 14 Relative Strength Rating and a 62 EPS rating.
Please follow Kit Norton on @KitNorton for more coverage.
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