Tesla Inc. TSLA global shareholders may encounter difficulties casting their votes on pivotal company resolutions, potentially impacting the outcome of the upcoming annual meeting.
What Happened: A significant number of Tesla shareholders might be unable to participate in the upcoming annual meeting vote. Approximately $17 billion in stock is at stake due to inadequate cross-border voting systems on investment platforms, The Financial Times reported on Sunday.
On June 13, shareholders are expected to vote on two critical resolutions: the re-ratification of CEO Elon Musk‘s $56 billion pay package and the proposal to reincorporate the company in Texas. These votes follow a Delaware judge’s ruling that questioned the independence of Tesla’s board and voided Musk’s share option package.
With retail shareholders owning about 30% of Tesla, their votes are crucial, especially for the Texas reincorporation, which requires a majority of all shares outstanding. Tesla’s Chair Robyn Denholm has compared the challenge of securing votes to “climbing Mount Everest.”
However, many international shareholders, particularly in Europe and Asia, are finding themselves unable to vote electronically. Investment platforms, including the U.K.’s largest, Hargreaves Lansdown, lack the necessary systems for such cross-border voting. Despite efforts, including a partnership between Crest and Broadridge, the service has not been fully implemented in time for Tesla’s meeting.
Other platforms like BNP Paribas’s Consorsbank also do not offer proxy voting for U.S. stocks. Some brokers, like Amsterdam-based Degiro and Switzerland’s Swissquote, have additional barriers such as fees or the need for phone confirmation to vote.
Meanwhile, Tesla and proxy solicitation firm Innisfree are campaigning vigorously to encourage voting, with tactics like direct calls, brochures, and social media campaigns on Musk’s platform X. Despite these efforts, the absence of voting infrastructure at many brokers remains a significant hurdle.
Tesla has yet to respond to the queries emailed by Benzinga.
Why It Matters: The anticipated shareholder vote on Elon Musk’s compensation package and Tesla’s reincorporation has been a subject of intense discussion. A survey by Morgan Stanley analyst Adam Jonas indicated that 57% of investors expect Musk’s pay package to be approved, which could significantly influence Tesla’s strategic direction and stock volatility.
Contrasting this sentiment, proxy advisory firms Glass Lewis and Institutional Shareholder Services (ISS) have advised shareholders to vote against Musk’s pay package, citing its “excessive” nature and potential dilutive effects.
Major shareholders have mixed stances, with some like Calpers openly opposing Musk’s pay deal. Musk’s reaction to Calpers’ decision was sharp, accusing them of breaking a deal and lacking honor in a post on X.
Price Action: Tesla shares were trading at $178.88 on Monday pre-market, showing a marginal increase from the previous close of $178.08 on Friday, according to Benzinga Pro. The stock has experienced fluctuations within a 52-week range of $138.8025 to $299.29.
Image via Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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