Benzinga - by Shanthi Rexaline, Benzinga Editor.
Tesla, Inc. (NASDAQ:TSLA) is making yet another strong push to get shareholder approval for CEO Elon Musk‘s controversial 2018 compensation package ahead of the annual meeting next month.
What Happened: The EV giant, in an SEC filing, said it had updated its dedicated website to rally shareholders with a letter urging them to vote in favor of proposals three and four — concerning re-domesticating Tesla in Texas and addressing Musk’s pay plan, respectively.
The letter, signed by Chair Robyn Denholm, emphasized Musk’s role in driving growth and creating significant shareholder value. It also highlighted Tesla’s transformation from a loss-making company to a profitable one under Musk’s leadership.
“Elon hit every ‘jaw-dropping’ target in the innovative and ambitious 2018 Award, leading to staggering growth,” it read. “We have seen what the leadership of an incentivized Elon can do to drive innovation and create value. Protect that same value creation for the future.”
Calls For Fairness: “And in America, a deal should be a deal. Despite having a signed contract in place, Elon has not been compensated for any of his work for Tesla over the past six years, even though he led Tesla to significant growth and stockholder value,” the statement said.
Tesla again criticized the Delaware Chancery court’s decision to nullify the pay plan as “fundamentally unfair and inconsistent with the will of the stockholders who voted for it.”
“As we embark on our next phase of growth, Elon’s leadership is more important than ever,” the proposal read.
Tesla bolstered its case with statistics, showcasing Musk’s turnaround of the company and the significant economic benefits Tesla has brought to Texas. The company also justified its proposed move to Texas by citing the state’s business-friendly environment.
Third-Party Praise: Tesla quoted Warren Buffett‘s 2020 praise of Musk’s achievements, in which the “Oracle Of Omaha” said: “Musk…shows what America produces. Elon is taking on General Motors and Ford and Toyota – all these people who have all this stuff. And he’s got an idea. And he’s winning. That’s America. You can’t dream it up. It’s astounding.” The company also mentioned Bridgewater Associates founder Ray Dalio‘s backing of the pay package when it was unveiled.
Why It Matters: Shareholder approval is crucial for the company’s future plans. Some speculate that Musk might step down if the proposal fails.
In January, the billionaire entrepreneur warned that if he is not vested with 25% voting control, he might “build somewhere else.”
Legal experts remain skeptical. They question the logic behind re-upping the pay package, suggesting a new award structure might be more appropriate.
Critics like Lawrence Fossi argue that Musk replicating past stock price gains used to justify the 2018 award is unlikely. He believes Tesla’s growth story has ended and the company faces potential shrinkage.
Tesla ended Tuesday’s session up 6.66% at $186.60, according to Benzinga Pro data.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
Photo via Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Read the original article on Benzinga
