Tesla’s upcoming annual general meeting (AGM) on June 13 faces potential hurdles as tens of thousands of international retail shareholders, holding around $17 billion in stock, may be unable to vote due to inadequate cross-border voting systems provided by investment platforms, reports the Financial Times.

Principales résolutions et défis

The electric vehicle maker is seeking investor support for two crucial resolutions: re-ratifying CEO Elon Musk’s $56 billion pay package and reincorporating the company in Texas. The latter move follows a Delaware judge’s decision to void Musk’s record-breaking compensation deal over concerns about board independence.

Tesla’s high proportion of retail shareholders, owning approximately 30% of the company, makes their votes critical for the success of both resolutions, particularly the Texas reincorporation, which requires a majority of all outstanding shares to vote in favor. However, many investors in Europe and Asia have encountered difficulties casting their votes electronically from outside the US due to limitations in the systems of their stockbrokers and online trading platforms.

Efforts pour faciliter le vote

Tesla, en collaboration avec la société de sollicitation de procurations Innisfree, a fait campagne pour persuader les courtiers de mettre en œuvre de nouveaux processus afin de permettre le vote transfrontalier. Malgré ces efforts, la plupart des courtiers n'ont pas procédé aux changements nécessaires, invoquant le manque de temps pour installer l'infrastructure requise.

Major investment platforms like the UK’s Hargreaves Lansdown and Germany’s Consorsbank, which hold significant numbers of Tesla shares on behalf of their clients, have been unable to facilitate voting for this AGM. Some platforms, such as Sweden’s Avanza, have made exceptions in response to the Tesla-backed PR campaign, allowing voting as a one-off.

Conseillers en procuration et investisseurs institutionnels

Adding to the challenges, both major proxy advisers, Glass Lewis and ISS, have urged Tesla shareholders to vote against Musk’s pay resolution, potentially influencing the decisions of large institutional investors. However, ISS has given “cautious” backing to the Texas reincorporation proposal.

Several top-10 Tesla shareholders, including Vanguard, Capital Group, Norway’s oil fund, and State Street, voted against the pay proposal in 2018. Baillie Gifford’s Scottish Mortgage Investment Trust, a long-standing shareholder, plans to back Musk’s $56 billion pay award this time. In contrast, Calpers, the largest US public pension fund and a top-25 shareholder, announced its intention to vote against the deal, citing concerns about the compensation not being commensurate with the company’s performance.

As the AGM approaches, Tesla faces significant challenges in securing the necessary votes for its key resolutions, particularly due to the difficulties faced by its substantial international retail shareholder base in participating in the voting process. The outcome of these votes will have significant implications for the company’s future, Musk’s compensation, and its corporate structure.

EVXL’s Take

Les difficultés rencontrées par Tesla lors de sa prochaine assemblée générale annuelle soulignent l'importance de systèmes de vote transfrontaliers robustes et accessibles pour les investisseurs individuels. Les entreprises comptant de plus en plus sur le soutien de leurs actionnaires individuels, il est essentiel que les plateformes d'investissement et les courtiers donnent la priorité au développement de mécanismes de vote efficaces et conviviaux.

Moreover, the controversy surrounding Musk’s compensation package and the proposed Texas reincorporation underscores the need for greater transparency and accountability in corporate governance. Shareholders, both institutional and retail, must have the opportunity to make informed decisions and have their voices heard in matters that significantly impact the companies they invest in.

As the world becomes more interconnected and retail investors play an increasingly vital role in the global financial landscape, it is essential that the infrastructure and processes that facilitate their participation keep pace with these developments. The outcome of Tesla’s AGM will not only shape the future of the company but also serve as a bellwether for the evolving relationship between corporations and their retail shareholders in the modern era.