PARIS, FRANCE – Tesla’s upcoming annual meeting on June 13 is facing potential hurdles as tens of thousands of international retail shareholders, holding about $17 billion worth of stock, may be unable to cast their votes. This is due to the lack of cross-border systems in place by investment platforms, posing challenges for Tesla to secure approvals for key resolutions.
The world’s largest electric vehicle manufacturer is striving to garner support for two critical proposals at its annual meeting – one to re-ratify CEO Elon Musk’s $56 billion pay package and another to reincorporate the company in Texas. The latter decision came following a Delaware judge’s ruling to void Musk’s lucrative share options due to concerns over board independence.
Tesla’s significant retail shareholder base, accounting for about 30% of the company, makes it crucial for them to vote in favor of the resolutions, especially the move to Texas. The voting process, particularly for international investors in Europe and Asia, has been impeded by inadequate systems on stockbroker and online trading platforms where they hold their shares.
Despite efforts by Tesla and proxy solicitation firm Innisfree to urge brokers to implement new processes, many have cited time constraints as a reason for not being able to facilitate the voting process for international shareholders. The need for a majority of all outstanding shares to vote in favor of relocating Tesla to Texas further amplifies the challenges as uncast votes are considered against the proposal.
Prominent investment platforms like Hargreaves Lansdown in the UK and BNP Paribas’s Consorsbank are among those facing limitations in offering proxy voting services for US stocks, potentially impacting the outcome of Tesla’s critical resolutions. Some platforms have imposed fees or require manual intervention for international shareholders to vote, discouraging retail investors from participating in the decision-making process.
The pressure is mounting on retail shareholders to cast their votes as influential proxy advisers like Glass Lewis and ISS recommend shareholders vote against Musk’s pay resolution. This advice holds weight among large institutional investors, further underscoring the significance of retail shareholders’ participation in Tesla’s voting process.
With the fate of key resolutions hanging in the balance, the engagement of retail shareholders in Tesla’s annual meeting has never been more crucial. As the company navigates through challenges stemming from cross-border voting limitations, the outcome of the meeting could have far-reaching implications for Tesla’s future initiatives and corporate governance.