Tesla and its Chief Executive Elon Musk each fired their own salvos at institutional investors apparently reluctant to give the nod to a disputed $58 billion compensation package for the head of the electric-vehicle giant. Musk himself said one key Tesla stock investor had "no honor."
Tesla wrote a detailed letter to shareholders on Wednesday, responding to a report by proxy advisory firm Glass Lewis on Musk's 2018 pay package, which remains under dispute six years after it was originally agreed on.
The investor group on Saturday released a report saying Musk's pay deal is "excessive" and cited the "dilutive impact" on current shareholders. Glass Lewis also opposed Tesla's proposal to reincorporate in Texas from Delaware.
The carmaker on Wednesday sent a response to holders of Tesla stock, alleging that Glass Lewis "omits key considerations, uses faulty logic and relies on speculation and hypotheticals," according to federal filings. The company wrote that Musk's leadership in less than six years has resulted in more than $735 billion in market value for Tesla shareholders.
"Elon has acknowledged on the record that the 2018 Performance Award incentivized and motivated him to help Tesla achieve this extraordinary growth," Tesla wrote. "Glass Lewis may believe that Elon should have done so with more 'focus,' but the fact is that Tesla's performance speaks for itself."
Glass Lewis is one of the two major proxy solicitation firms. The other is Institutional Shareholder Services, or ISS. Late Thursday, ISS recommended shareholders vote against approving Musk's pay package. However, ISS did recommend support Tesla's incorporation to Texas from Delaware.
On Musk's compensation package, ISS wrote that "although the structure of the grant's performance hurdles arguably contributed to, as well as reflect, the company's significant financial growth during the performance period, the total award value remains excessive, even given the company's success."
Back in 2018, ISS also recommended voting no on the pay deal.
Musk Airs Grievances On X
Meanwhile, California Public Employees' Retirement System Chief Executive Marcie Frost told CNBC Wednesday it will be voting against approving Musk's pay package. The group, known as CalPERS, is the largest public pension fund in the U.S. by assets.
Following the interview, Musk posted on X that CalPERS "broke the deal."
"Shame on them, they have no honor," he wrote.
Responding on Thursday to a post on X referring to Tesla shareholders who approved the pay package in 2018 but are voting against it currently, Musk said "they are oathbreakers."
Tesla: Drumming Up Votes
Tesla on April 17 requested that shareholders ratify Musk's 2018 pay package despite a Delaware court voiding the plan earlier this year. The EV giant has been attempting to drum up votes of its retail investor base. Retail, or individual investors, currently own around 30% of Tesla stock.
Musk's compensation deal is currently valued at around $45 billion.
The vote comes after a Delaware judge ruled against the 2018 package, deciding that the package was excessive and unfair to Tesla investors. The judge criticized Musk's "extensive ties" with Tesla board members.
Tesla board Chair Robyn Denholm and other Tesla executives plan to spend the coming weeks traveling across the world to get support from shareholders, according to the Wall Street Journal. In 2018, the Tesla board won approval for Musk's 2018 pay package with 73% of the vote.
Voting has been open for the past few weeks. The Tesla board has recommended "yes" votes on both reincorporating in Texas and Musk's pay. The annual shareholder meeting is scheduled for June 13.
Institutional investors hold a much larger share of Tesla stock than they did in 2018. Vanguard voted against the Musk pay package in 2018, while BlackRock and many others supported it.
Eight institutional investors have announced they oppose Musk's pay package, according to federal regulatory filings. The investors include Amalgamated Bank, New York City Comptroller, Nordea Asset Management, AkademikerPension and SOC Investment Group, among others.
Tesla Stock Performance And The Tesla Vote
TSLA shares edged down 0.4% to 178.10 during market trade on Friday. News reports circulated early Friday that Tesla has reduced vehicle prices in Denmark.
Tesla stock on Thursday gained 1.5% to 178.79 after Reuters reported early that Tesla is preparing to register Full Self-Driving, or FSD, with China regulators.
After registration, Tesla can have employees test FSD on public roads in China. The company can then offer it as an upgrade to customers in the coming months, according to Reuters.
TSLA shares dropped 2.8% in May and has sunk around 30% so far this year.
However, Tesla has rallied since reporting first-quarter earnings and revenue on April 23, finding support at its 50-day moving average, according to MarketSurge analysis. On April 22, Tesla stock hit a 52-week low of 138.80.
Adam Jonas, Morgan Stanley's high-profile autos analyst and a Tesla bull, wrote last week that "as investors question if the CEO's commitment is less or more, we believe Elon needs Tesla more than ever before."
"We would encourage investors to pay close attention to the June 13th shareholder vote," Jonas said. "While impossible to predict the outcome, we expect the event could drive material volatility in the stock."
Tesla stock ranks eighth in the 35-member IBD Auto Manufacturers industry group. The stock has a weak 37 Composite Rating out of a best-possible 99. Shares have a 14 Relative Strength Rating and a 62 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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