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Tesla's 2024 Annual Shareholder Meeting: What Investors Need to Know
$Tesla (TSLA.US)$ will hold its annual shareholder meeting on Thursday, with investors voting on whether to reapprove CEO Elon Musk's $55.8 billion pay package and whether to move Tesla's state of incorporation from Delaware to Texas.
Take a look at the background
Musk’s all-stock pay package, awarded in 2018, has been embroiled in controversy and was struck down by a Delaware court earlier this year. While shares shot up more than 1,700% between when the original package was approved in 2018 and its high point in November 2021, it has lost more than half of that value since, including a 30% drop this year.
Tesla has been forced to cut prices in the face of weaker than forecast demand for sales, and increased competition from other automakers offering their own EVs. In addition, Musk has laid off over a tenth of his 140,000-strong workforce to salvage the declining performance.
Despite Tesla’s problems and the controversy swirling around Musk, many shareholders believe keeping him at the company, and focused on Tesla more than SpaceX, his new artificial intelligence company xAI, and his rebranded social media company X, or his other ventures, is crucial for the company’s future.
"I am uncomfortable growing Tesla to be a leader in AI & robotics without having 25% voting control. Enough to be influential, but not so much that I can’t be overturned," Musk said from his X account in January. "Unless that is the case, I would prefer to build products outside of Tesla."
So, will Tesla shareholders once again bless Elon Musk's pay package proposal?
“Elon is the ultimate ‘key man’ of key man risk,” billionaire Tesla investor Ron Baron wrote last week in an open letter. “Without his relentless drive and uncompromising standards, there would be no Tesla.”
“I’d argue that no other executive is as aligned with shareholders as Elon Musk who committed to no salary, no bonus, no stock comp FOR 10 YEARS, unless he created tremendous value for Tesla shareholders,” ARK Invest founder and CEO Cathie Wood posted on X late last week.
Conversely, proxy adviser firm Glass Lewis urged shareholders to vote against Musk’s compensation, arguing that the “excessive size” of the award and the dilutive effect of it on existing shareholders were major concerns. ISS, the other major proxy adviser firm, recommended that shareholders vote down the package as well.
However, the drama could be much ado about nothing when the votes are counted, with shareholders expected to give Musk what wants.
“Musk’s pay package has been an area of hot button contention among some investors but we would expect the 2018 package will be overwhelming reapproved,” Wedbush analyst Dan Ives predicted in a note to investors late last week.
Another point of the annual meeting is whether to approve incorporating in Texas
When Delaware Chancery Court Chancellor Kathaleen McCormick voided the compensation package in January, she said that process the Tesla board used to create the pay package was “deeply flawed” and criticized the board for being too close to the famous CEO to represent the interests of the shareholders.
Musk and Tesla reacted by appealing the ruling, and by seeking permission from shareholders to move the company’s state of incorporation from Delaware to Texas, where its headquarters is located. Many major companies are incorporated in a different state from where their main offices are located, often in Delaware, which has a reputation for being business friendly. It was because of Tesla’s incorporation in Delaware that McCormick was able to rule on the fairness of the pay package.
How the vote could affect Tesla's stock price
Jefferies analysts indicated that shareholders rejecting the proposal would be a negative for the business and stock. "However ill-designed the scheme was, we believe denying Elon Musk his past compensation would look like misplaced 'buyers remorse.'"
Piper Sandler analysts echoed a similar sentiment, saying that a rejection of the compensation plan could send shares lower.
Mooers, what do you think? Will Tesla shareholders reapprove CEO Elon Musk's pay package proposal? Will they approve moving Tesla’s state of incorporation from Delaware to Texas?
Source: Yahoo Finance, CNBC
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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ShawnChengDu : Pay the man
WillsonToh : He did not increase the market hence no pay
57AB : please pay the man, don't be like your pastor Trump who do not pay contractors. pay him immediately with interest and apology![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
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Clo Pro : How so? Without Elon there would be no market!
Mario M Lopez : He deserves to get paid!
Kenneth Edwards : Get out of Delaware! Texas is much more business-friendly than the blue Biden state.
請照亮我前行 : Pay him to generate few time more revenue. No one can replace him!
101828382 : so what is Tesla future with him? anyone has any idea?
102593408 : Just pay lah!
Guicho 57AB : Don't lie about Pinocchio's nose!
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