Morgan Stanley analyst Adam Jonas conducted an investor survey over the week to conclude that more investors expect Tesla TSLA CEO Elon Musk‘s 2018 pay package to be reinstated than not.
What Happened: 57% of the 109 respondents to the survey expect the package to be approved with a shareholder vote, outnumbering the 23% of respondents who expect non-approval by a two-to-one ratio, Jonas revealed in a note on Friday.
The Tesla bull expects the upcoming shareholder vote on Musk’s pay package to determine the long-term strategic direction of the company and drive material volatility in Tesla shares.
Most investors believe a non-approval of the pay package will drive down stock while approval drives it up. About 68% of the investors Jonas surveyed said that they expect Tesla’s stock price to react positively over three trading days if the package is approved. A small 24% of these respondents even expect the stock to be up 6-10%.
81% of the respondents, meanwhile, are assured that the stock price will slump if the package is not approved with 54% expecting the stock to be down 6-10% or more.
Jonas, however, noted that 109 respondents are a small sample, and not all of them are necessarily Tesla shareholders.
Why It Matters: Shareholders will vote on Tesla's move to incorporate in Texas and Musk's rescinded 2018 compensation ahead of the June 13 annual meeting. The pay package, worth $56 billion at the time of award, was rescinded by a Delaware court earlier this year after deeming it an "unfathomable sum."
Tesla’s board is attempting to reinstate it with a shareholder vote yet again. The vote results will be announced at the company’s upcoming shareholder meeting scheduled for June 13.
Proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis have both recommended that shareholders vote against the pay package this time, terming it “excessive.”
On Thursday, Musk slammed shareholders who voted for his package in 2018 but are now voting against it as "oathbreakers."
He also slammed the California Public Employees’ Retirement System (CalPERS) as lacking honor after the public pension fund's CEO Marcie Frost announced its decision to vote against Musk’s pay package.
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