Bernstein Warns Tesla CEO’s $56B Pay Package Faces Tough Shareholder Vote - EV
Written by
Cláudio Afonso |
LinkedIn |
X
Bernstein analysts have expressed doubts about the approval of
Tesla CEO Elon Musk’s $56 billion pay package, suggesting it is unlikely to pass the upcoming shareholder vote this Thursday.
According to the latest research note, approximately 25 percent of the eligible voting shares are either held by passive investors who are likely to follow the “no” recommendations from influential proxy advisory firms ISS and Glass Lewis or by institutional investors who have already publicly stated their intention to vote against the package.
The company has historically seen a maximum voter turnout of 63 percent in any shareholder vote. Bernstein posits that even if this turnout significantly increases to 75 percent, more than 73 percent of the remaining uncommitted voters would need to vote in favor of the pay package for it to be approved.
On a more optimistic note, the firm suggests that the chances of
Tesla’s proposed re-domestication to Texas being approved are higher, although still uncertain.
Bernstein highlights the financial implications of the potential rejection of Musk’s pay package. If blocked,
Tesla‘s diluted share count could decrease by 9 percent, leading to a 10 percent increase in earnings per share.
However, the analyst warns that a rejection might trigger a 5 percent or more drop in Tesla’s stock due to concerns over Musk possibly leaving the company.
Despite these concerns, retail shareholders have shown strong support for Musk. “So far, roughly 90 percent of retail shareholders who have voted have voted in favor of both resolutions. The public sentiment is unequivocally supportive,” Musk stated on social media platform X on Sunday.
Bernstein maintains an Underperform rating on Tesla with a price target of $120. The firm believes investors may be underestimating the risk of Musk’s pay package being rejected, making the risk/reward scenario ahead of the shareholder vote skewed towards the downside.
Tesla registered a significant decrease drop sales in Germany last month, with registrations plummeting by 64 percent year-over-year, according to data released by the German Federal Motor Transport Association (KBA).
The overall registration of passenger cars in Germany fell to 236,425 units in May, marking declines both month-over-month and year-over-year.
This includes battery electric vehicles (BEVs), which comprised 12.6 percent of new registrations, totaling 29,708 units. This figure represents a substantial 30.6 percent decline compared to May 2023.
Written by
Cláudio Afonso |
LinkedIn |
X
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