By Dana Hull and Anders Melin
Tesla Inc. is looking to woo its unusually large base of retail investors to get approval for Chief Executive Officer Elon Musk’s $56 billion pay package.
To help lead that drive, the company’s board has hired a strategic adviser, according to a person familiar with the matter. To bolster the campaign, the adviser is working with an outside law firm, the person said.
The adviser has set up a dedicated Vote Tesla website to encourage participation among retail investors, who hold an estimated 42% of shares in the company. It urges shareholders to cast votes online, by QR code, by phone and by mail. It also features a video with board Chair Robyn Denholm, who says supporting Musk’s pay is critical to Tesla’s growth.
RELATED: Tesla rehires some Supercharger workers weeks after Musk’s cuts
That’s all ahead of Tesla’s June 13 annual meeting, when investors in the electric-car maker will vote on whether to uphold a 2018 compensation agreement. A Delaware judge vetoed the package three months ago, writing in her opinion that Tesla directors hadn’t looked out for the best interests of investors.
FILE – Elon Musk arrives at an event in Los Angeles, April 13, 2024. Shares of Tesla stock rallied Monday, April 29, 2024, after Musk, the electric vehicle maker’s CEO, paid a surprise visit to Beijing over the weekend and reportedly won tentative approval for its driving software. (Photo by Jordan Strauss/Invision/AP, File)
A Tesla Model Y Long Range charges, Wednesday, Sept. 27, 2023, in Woodstock, Ga. (AP Photo/Mike Stewart)
Tesla and SpaceX’s CEO Elon Musk attends the first plenary session on of the AI Safety Summit at Bletchley Park, on Wednesday, Nov. 1, 2023 in Bletchley, England. Digital officials, tech company bosses and researchers are converging Wednesday at a former codebreaking spy base near London to discuss and better understand the extreme risks posed by cutting-edge artificial intelligence. (Leon Neal/Pool Photo via AP)
Tesla and SpaceX’s CEO Elon Musk smiles during an in-conversation event with Britain’s Prime Minister Rishi Sunak in London, Thursday, Nov. 2, 2023. Sunak discussed AI with Elon Musk in a conversation that is played on the social network X, which Musk owns.(AP Photo/Kirsty Wigglesworth, Pool)
A Tesla Cybertruck is on display at the Tesla showroom in Buena Park, Calif. on Sunday Dec. 3, 2023. With manufacturing kinks still to be worked out, Tesla has delivered the first dozen or so of its futuristic Cybertruck pickups to customers. (AP Photo/Richard Vogel)
A Tesla Cybertruck is on display at the Tesla showroom in Buena Park, Calif. on Sunday Dec. 3, 2023. With manufacturing kinks still to be worked out, Tesla has delivered the first dozen or so of its futuristic Cybertruck pickups to customers. (AP Photo/Richard Vogel)
A Tesla Cybertruck is on display at the Tesla showroom in Buena Park, Calif. on Sunday Dec. 3, 2023. With manufacturing kinks still to be worked out, Tesla delivered the first dozen or so of its futuristic Cybertruck pickups to customers Thursday, two years behind the original schedule amid uncertainty over when large-scale production will begin. (AP Photo/Richard Vogel)
Tesla and SpaceX’s CEO Elon Musk arrives, holding one of his children on his shoulders, at the annual political festival Atreju, organized by the Giorgia Meloni’s Brothers of Italy political party, in Rome, Saturday, Dec. 16, 2023. (AP Photo/Alessandra Tarantino)
Tesla and SpaceX’s CEO Elon Musk waves as he arrives at the annual political festival Atreju, organized by the Giorgia Meloni’s Brothers of Italy political party, in Rome, Saturday, Dec. 16, 2023. (AP Photo/Alessandra Tarantino)
A pockmarked side of a Tesla Cybertruck that was tested by a Thompson machine gun sits on display at the Petersen Automotive Museum in Los Angeles on Thursday Dec. 21, 2023. Three of the first-ever built Tesla Cybertrucks are now on display at the museum as part of “Inside Tesla: Supercharging the Electric Revolution.” Gathering the most comprehensive collection of Tesla products to date, the exhibit features everything from early concept vehicles to rarely seen prototypes and world-record-breaking production vehicles. (AP Photo/Richard Vogel)
A Tesla battery electric Semi is seen on display in the parking garage at the Petersen Automotive Museum in Los Angeles on Thursday Dec. 21, 2023. Three of the first-ever built Tesla Cybertrucks are now on display at the museum as part of “Inside Tesla: Supercharging the Electric Revolution.” Gathering the most comprehensive collection of Tesla products to date, the exhibit features everything from early concept vehicles to rarely seen prototypes and world-record-breaking production vehicles. (AP Photo/Richard Vogel)
A 40-percent scale model of a Tesla battery electric Semi is seen on display at the Petersen Automotive Museum in Los Angeles on Thursday Dec. 21, 2023. Three of the first-ever built Tesla Cybertrucks are now on display at the museum as part of “Inside Tesla: Supercharging the Electric Revolution.” Gathering the most comprehensive collection of Tesla products to date, the exhibit features everything from early concept vehicles to rarely seen prototypes and world-record-breaking production vehicles. (AP Photo/Richard Vogel)
File – Tesla cars are parked at the construction site of the new Tesla Gigafactory for electric cars in Gruenheide near Berlin, Germany, March 18, 2022. Tesla is expected to report fourth quarter and full year sales Tuesday as electric vehicle sales growth continues to slow. (AP Photo/Michael Sohn, File)
Motorist recharges a Model Y at a Tesla supercharging location Tuesday, Jan. 16, 2024, in northeast Denver. (AP Photo/David Zalubowski)
Ankita Bansal prepares to charge her Tesla, Wednesday, Jan. 17, 2024, in Ann Arbor, Mich. A subzero cold snap across the nation has exposed a big vulnerability for electric vehicle owners. It’s difficult to charge the batteries in single-digit temperatures. Experts say it’s simple chemistry, that the electrons move slowly and don’t take in or release as much energy.(AP Photo/Carlos Osorio)
FILE – Tesla vehicles line a parking lot at the company’s Fremont, Calif., factory, on Sept. 18, 2023. Tesla’s stock is faltering before the market open on Thursday as the electric vehicle, solar panel and battery maker cautioned on slower sales growth this year and posted weaker-than-expected quarterly earnings. (AP Photo/Noah Berger, File)
FILE – Motorists recharge their Tesla vehicles at a Tesla supercharging location, Jan. 16, 2024, in northeast Denver. Wisconsin Gov. Tony Evers signed bipartisan bills Wednesday, March 20, 2024 designed to jump-start creation of an electric vehicle charging network along Wisconsin’s interstate system and major highways. (AP Photo/David Zalubowski, file)
FILE – Tesla CEO Elon Musk waves as he leaves the Tesla Gigafactory for electric cars after a visit in Gruenheide near Berlin, Germany, March 13, 2024. After reporting dismal first-quarter sales, Tesla is planning to lay off about a tenth of its workforce as it tries to cut costs, multiple media outlets reported Monday. (AP Photo/Ebrahim Noroozi, File)
FILE – An 2023 Model X sits outside a Tesla dealership on June 18, 2023, in Englewood, Colo. After reporting dismal first-quarter sales, Tesla is planning to lay off about a tenth of its workforce as it tries to cut costs, multiple media outlets reported Monday. (AP Photo/David Zalubowski, File)
A Tesla Cybertruck is on display at the Tesla showroom in Buena Park, Calif. on Sunday Dec. 3, 2023. Tesla is recalling 3,878 of its 2024 Cybertrucks after it discovered that the accelerator pedal can become stuck, potentially causing the vehicle to accelerate unintentionally and increasing the risk of a crash. (AP Photo/Richard Vogel)
FILE – In this Oct. 24, 2016, file photo, palm trees are reflected on the hood of a Tesla Model S on display in downtown Los Angeles. Tesla reports earnings on Tuesday, April 23, 2024. (AP Photo/Richard Vogel, File)
FILE – A Model X sports-utility vehicle sits outside a Tesla store in Littleton, Colo., June 18, 2023. Shares of Tesla stock rallied Monday, April 29, 2024, after the electric vehicle maker’s CEO, Elon Musk, paid a surprise visit to Beijing over the weekend and reportedly won tentative approval for its driving software. (AP Photo/David Zalubowski, File)
A Tesla Cybertruck sits in a parking deck on the campus of the University of Colorado Saturday, April 27, 2024, in Boulder, Colo. (AP Photo/David Zalubowski)
FILE – A vehicle charges at a Tesla Supercharger station in Detroit, Nov. 16, 2022. Elon Musk’s move to lay off the department responsible for Tesla’s electric vehicle charging network has touched off worries in the auto industry about plans to open the chargers to EVs made by other automakers. Several leaders of Tesla’s Supercharger team posted social media messages saying they were told Monday, April 29, 2024 that entire group of about 500 had been eliminated by CEO Musk. (AP Photo/Paul Sancya, File)
This image provided by Colorado State Patrol shows a Tesla Model 3 that crashed on May 16, 2022 in Clear Creek County, Colo. The widow of a man who died after his Tesla veered off the road and crashed into a tree while he was using its partially automated driving system in Colorado in 2022 is suing the car maker, claiming its marketing of the technology is dangerously misleading. The Autopilot system prevented Hans Von Ohain from being able to keep his Model 3 Tesla on the road and he died after the car burst into flames after hitting the tree, according to the lawsuit filed by Nora Bass in Colorado state court on May 3, 2024. A passenger was able to escape, it said. (Colorado State Patrol via AP)
Protesters march outside the Tesla factory in Grunheide, Germany on Saturday, May 11, 2024. (Patrick Pleul/dpa via AP)
Demonstrators walk past the Tesla factory in Grunheide, Germany on Saturday, May 11, 2024, at the end of their protest. (Patrick Pleul/dpa via AP)
This photo provided by Edmunds shows a line of parked Tesla Model 3 and Model Y vehicles. The shopping and research process when buying your first used Tesla can be more involved than what’s required for a typical gas-powered car. (Courtesy of Edmunds via AP)
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FILE – Elon Musk arrives at an event in Los Angeles, April 13, 2024. Shares of Tesla stock rallied Monday, April 29, 2024, after Musk, the electric vehicle maker’s CEO, paid a surprise visit to Beijing over the weekend and reportedly won tentative approval for its driving software. (Photo by Jordan Strauss/Invision/AP, File)
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“We don’t believe one judge’s opinion should void the will of millions of votes cast by all of the owners,” Denholm says in the video on the Vote Tesla website.
While the vote is only advisory, it could have big implications for the future of Musk’s leadership. Securing majority approval would bolster the board’s arguments that the Delaware court was wrong. A loss would be a major embarrassment.
RELATED: Protesters gather at factory in Germany for ‘Disrupt Tesla Action Days’
Musk has threatened to develop products outside of Tesla if he doesn’t attain at least a 25% equity stake in the carmaker —a key part of the voided pay package.If the remuneration deal is reinstated, the CEO has enough options to almost double his current holding in Tesla andland at roughly 21%. The path for Musk to attain that larger stake becomes unclear if shareholders don’t vote it through.
On Musk’s social media platform X, Tesla fans have been voicing their support for the CEO. In hundreds of posts tagged #VotedTesla24,many users who say they’reinvestors claim to have already cast their ballots. Musk himself has urged shareholders to participate, reposting messages from people like self-described “Fangirl of Elon,” Alexandra Merz.
Merz, a Santa Barbara, California, resident known as “Tesla Boomer Mama” on X,has created tools tohelp Tesla shareholders write to large index funds and ask to vote shares that may be held in retirement accounts or other accounts they don’t manage directly.
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Tesla Shareholders, It's Time Again to Make Your Voice Heard:
Write to Your Fund Managers About Tesla's Proxy Votes! They have a huge voting power and we must make our voices heard.
Dear Fellow Tesla Shareholders,
As the upcoming Tesla shareholder meeting approaches,… pic.twitter.com/cHsQFAWDHY
— Ale𝕏andra Merz (@TeslaBoomerMama) April 22, 2024
“I want to make sure that retail investors vote,” Merz said by phone.“But I also want people to reach out to their fund managers.” (Some brokers outside of the US don’t allow retail shareholders to vote.)
Even with Musk fans rallying for support, the board still has work to do to win the vote. Typically, few retail investors actually vote at annual meetings.
RELATED: Is Musk controversy responsible for Tesla’s struggles?
At least one large retail investor, Leo KoGuan, has said he won’t support the pay deal. He’s also publicly railed against the way Musk has been managing Tesla, which seems to have also unsettled the market at large.
Tesla’s financial performance has been flagging amid a global slowdown in electric vehicle sales. Days before the company asked shareholders in a filing to support Musk’s $56 billion pay deal, Tesla said it was cutting global headcount by more than 10%.
Meanwhile, a series of top executives have left Tesla as it’s shifted focus to building autonomous robotaxis over more affordable EVs. The stock has fallen 29% so far this year, compared to a 10% gainin the S&P 500.
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Singapore-based KoGuan, a billionaire businessman, has long beena big admirer of Musk. But he’s grown increasingly wary of the entrepreneur’s many commitments — SpaceX, Neuralink, X and more — and said his job at Tesla shouldn’t merely be a way to bankroll other business ventures.
“The court had spoken and many facts came out,” KoGuan, who owns about 0.8% of Tesla, said in an email. “He has to respect and obey the court’s decision.”
KoGuan said he’ll also vote no on a separate proposal to move Tesla’s corporate domicile to Texas from Delaware, where the judge struck down Musk’s pay deal. Tesla already moved its corporate headquarters to the Lone Star state from California in December 2021. This week, the company said it’s runningsponsored adsto vote for both proposals.
RELATED: Tesla laying off 10% of workers after dismal sales in early 2024
The board’s strategic adviser that set up the Vote Tesla website is also helping the company liaise with large asset managers, people familiar with the matter said. Those investors hold roughly 46% of the company’s shares, down from about 70% when the first vote was held back in 2018, according to data compiled by Bloomberg.
Observers will closely watch the impending recommendations by proxy advisory firms Institutional Shareholder Services Inc. and Glass Lewis & Co., which are widely believed to have some impact on how votes are cast, particularly for shares held in passive funds.
After Musk himself, Tesla’s largest investors are Vanguard and BlackRock, which hold shares in myriad active and passive funds. Representatives for both asset managersdeclined to comment, citing company policy on publicizing votes before annual meetings.
The Tesla board won the 2018 pay vote with73% of votes cast supported the deal, but the situation may be tougher now.
Shareholders who held stock six years ago have seen the value of their equity soar as Musk met one pay condition after another. He ultimately earned the last of his options in the second quarter of 2021 after the value of Tesla soared above $650 billion. It later peaked at about $1.2 trillion.
Now, Tesla’s market capitalization sits at less than $600 billion. Musk has attracted new critics as the owner of X, where he frequently posts controversial political opinions and attacks the media.
Still, there’s no clear executive to take the place of Musk, who’s widely seen as the driver behind its transformation from a scrappy Silicon Valley startup to the world’s most valuable automaker. On social media, shareholders have been praising his contributions to the company as they urge others to vote for the pay deal.
“It’s not much, but I did what I could!” one X user wroteon May 11, postinga screenshot of their vote confirmation. “The people are with you,@elonmusk!”
With assistance from Silla Brush.
Originally Published:
