Tesla|The advisor guiding institutional investors’ voting decisions calls for rejecting both Elon Musk’s remuneration of more than 50 billion euros, the transfer of the headquarters to Texas, and the election of Musk’s brother to the company’s board.
Elon Musk’s and Tesla’s board of directors’ plans for the company’s June general meeting suffered a setback over the weekend.
News agency Bloomberg and a financial magazine Financial Times say that the Glass Lewis company, which advises large investors on general meeting votes, urges investors to oppose several proposals of Tesla’s board of directors.
According to Glass Lewis, the company’s owners should oppose both the reward program given to Elon Musk worth more than 50 billion euros, the official transfer of the company’s headquarters to Texas, and the election of Musk’s brother Kimbal to the company’s board.
Tesla’s the general meeting will be held on June 13. Glass Lewis’s position may be significant because many large institutional investors often vote at general meetings on the recommendations of Glass Lewis and another respected advisory firm, ISS.
The services of advisers are used because it is not appropriate for large investors to familiarize themselves in depth with the general meeting presentations of all the companies they own. ISS has not yet expressed its position on Tesla’s board of directors’ proposals.
In Tesla’s case, it is a matter of such a significant company and such significant decisions for the company’s shareholders that major investors may still form their position regardless of the advisors’ views.
Musk the reward is about the stock option arrangement originally decided by the general meeting in 2018, according to which Musk will receive the company’s shares in twelve installments whenever certain market value thresholds are exceeded.
One Tesla shareholder challenged the arrangement, which it considered unfair to other owners. A Delaware state judge invalidated the contract in January of this year. The judge found the amount of the reward “incomprehensible”.
However, the company’s board of directors decided to bring the fee back to the general meeting for consideration.
Glass Lewis according to a statement released on Saturday, Musk’s stock option arrangement should not be approved because it unduly dilutes the ownership of other shareholders and is too large in size.
According to the advisor, the benefit to the shareholders of the proposed relocation of the company’s headquarters to Texas is questionable and would increase the company’s risks. In practice, the company’s headquarters moved from California to Austin, Texas already at the end of 2021.
Musk has justified the move by, among other things, Texas’ freer regulation.
Glass Lewis also criticized Musk’s “side activities”. Among other things, the takeover of messaging service X and the change program take too much time from Tesla’s management, according to the statement.
Tesla’s chairman of the board by Robyn Denholm according to Musk has earned his giant bonus because the company has been so successful and the market value has risen accordingly. Tesla’s value has increased approximately eightfold in six years.
According to the Financial Times, even the new decision of the general meeting would not overturn the Delaware court decision, but the company hopes that it would have an impact on the handling of the company’s appeal against the decision.
According to the newspaper, some of the big investors are going to vote in favor of the government’s proposals, regardless of the advisors’ positions.
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