Tesla ramps up pay proposal push with retail investors
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Illustration: Sarah Grillo/Axios
Tesla's tactics to court retail investor participation in its upcoming shareholder meeting is another indication of the rising influence of individual traders.
Why it matters: Retail investors have jumped back into the market this year, helping to move shares of big companies like Nvidia and Microsoft.
- And as the percentage of shares that they own grows, their votes are becoming more crucial too.
State of play: Tesla has launched a website, started paying for advertising and is raffling a factory tour with Elon Musk in an effort to rally public shareholder support for two main proposals — reapproval of Musk's $56 billion pay package and reincorporating in Texas.
- Proxy advisor service ISS Friday recommended shareholders vote against the compensation item, following suit with its peer Glass Lewis.
- And though institutional money managers don't always vote with these recommendations, some, including CalPERS and Nordea Asset Management, have already spoken out or said they would vote against it.
What they're saying: Tesla's leadership direction and approach to wooing investors is all "super dumb," vocal and longtime Tesla shareholder Ross Gerber tells Axios.
- "What they should be doing is proving how much Elon cares about Tesla."
Reality check: Christina Sautter, a professor at SMU Dedman School of Law, tells Axios that she doesn't believe Tesla has nurtured retail investors as well as it could have.
- She also notes that even if Tesla got a simple majority vote to approve the pay package, the outcome wouldn't overturn a Delaware judge's ruling in January to invalidate it.
What we're watching: Voting is already underway ahead of the meeting on June 13.
- A report by trading platform eToro from earlier this month showed that votes had been placed on about 25% of all Tesla shares from its users and that more than 80% were in favor of Musk's package, per Reuters.
- Roughly 44% of Tesla's common stock is held by non-professional shareholders, according to S&P Global Market Intelligence, per the Reuters report.
