Some Tesla shareholders oppose it, will Musk's "payday" this week be in vain?

According to the financial news, a well-known shareholder of Tesla (TSLA.US), the California State Teachers' Retirement Fund, publicly stated that they will vote against CEO Elon Musk's $56 billion compensation plan. As of the date of their most recent update on holdings, the California State Teachers' Retirement Fund holds nearly 4.7 million shares of Tesla. It is worth noting that the fund held shares of the company even before Tesla went public in 2010. Elon Musk has stated that 90% of the retail shareholders who have already voted support his compensation plan.

On Friday, June 14th at 4:30 AM Beijing time, Tesla will hold its 2024 shareholder meeting, with a key agenda being the vote on CEO Musk's $56 billion compensation plan. As the CEO of the world's largest electric vehicle manufacturer, Musk does not receive a traditional fixed salary, and all his compensation is tied to the company's market value and performance. In 2018, Tesla's board granted Musk a $56 billion incentive stock option as his compensation for the coming years, contingent on Musk achieving a series of growth and profit targets. However, earlier this year in 2024, due to a Delaware judge ruling that there was insufficient disclosure to investors at the time of the previous vote, the earlier vote was invalidated, necessitating a re-vote.

There are differing opinions on Wall Street regarding the outcome of this week's vote. Wedbush Securities analyst Dan Ives expects that the 2018 package will be approved again, and the ruling by the former Delaware court will have no practical significance as Tesla will also receive shareholder approval, and the company is registered in Texas. Despite hearing that the Norwegian sovereign wealth fund will vote against, Barclays lowered its confidence in the plan, but still believes that Tesla shareholders will approve Elon Musk's 2018 compensation plan.

Meanwhile, Baird warns that rejection of Musk's compensation plan is a realistic scenario, partly because many retail investors either do not vote or simply follow historical trends of proxy recommendations. If rejected, it would mean Tesla would need to restate historical financials and adjust downward the number of shares and general administrative expenses. However, the company believes that the risk of Tesla's stock price falling by at least 5% due to Elon Musk threatening to leave Tesla is real. Other analysts also warn that if legal disputes arise between Musk and the company he founded, stock prices will be volatile.

As of the time of writing, Tesla's stock price has fallen by 0.10% in pre-market trading to $173.56, with a 52-week trading range of $138.80 to $299.29. Year-to-date, the company's stock price has fallen by over 30%. Short interest in Tesla accounts for only 3.78% of total outstanding shares