Ahead of Tesla’s shareholder meeting, analysts are split on the potential approval of CEO Elon Musk’s trillion-dollar pay package. The package has sparked both support and opposition from major investors and analysts.
Predictions of Approval
Some analysts, such as Dan Ives of Wedbush Securities, predict that the package will receive approval from shareholders. Ives believes that the pay package is a crucial step towards Tesla’s autonomous roadmap and that shareholders will show overwhelming support for Musk and the xAI stake. He expects the approvals to turn Tesla into an “AI juggernaut.”
Caution and Opposition
On the other hand, analysts like Adam Jonas of Morgan Stanley exercise caution, warning that a failed vote could be seen as a “vote of no confidence” in Musk’s role as CEO. Jonas believes that the vote is one of the most important events in the company’s history and that a failed vote could trigger a significant selloff. Other investors, such as Ross Gerber and Norway’s Sovereign Wealth Fund, have also expressed opposition to the package, citing concerns over the total size of the award, dilution, and lack of mitigation of key person risk.
Recommendations from Major Investors
Gary Black, managing director of Future Fund LLC, recommends voting in favor of the package, while Gene Munster of Deepwater Asset Management offers a balanced view, stating that the vote has become personal for Musk. Cathie Wood, CEO of ARKInvest, questions why investors would want to vote against the package, given the potential benefits for shareholders. Charles Schwab has also announced that it will vote in favor of the package.
Substantial Opposition
Despite the support from some analysts and investors, the package faces substantial opposition from major investors, including the California Public Employees Retirement System (CalPERS) and Norway’s Sovereign Wealth Fund. CalPERS holds over $2.3 billion in Tesla shares and has expressed concerns over the concentration of power and the potential risks associated with the package.
Conclusion
The fate of Elon Musk’s trillion-dollar compensation package hangs in the balance as Tesla’s shareholder meeting approaches. With analysts and investors divided on the issue, the outcome of the vote is far from certain. One thing is clear, however: the decision will have significant implications for Tesla’s future and the role of its CEO, Elon Musk.
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