© Reuters Activist investors aim to transform Tesla (TSLA) after Elon Musk's pay decision
In the latest development, activist investors targeting Tesla (NASDAQ:)'s board for failing to rein in CEO Elon Musk's influence have claimed that Musk's $56 billion stake in We believe that recent court decisions on compensation could provide the catalyst needed for meaningful reform.
The decisive moment came when a Delaware judge invalidated Musk's record-breaking compensation, marking a strong criticism of the close relationship between the board and the CEO. Critics are now hoping to use the ruling to drum up support from big index funds and investors in future shareholder votes.
Independent activist investor John Cheveden aims to capitalize on this momentum by introducing a resolution at Tesla's spring shareholder meeting. The proposal aims to replace the requirement of gaining the support of his two-thirds of the current number of outstanding shares required for major changes in a company with a simpler majority vote.
“People will try to suppress what's going on,” Cheveden said.
Notably, the directors up for re-election this year include Musk's younger brother Kimbal and former 21st Century Fox CEO James, who a Delaware judge deemed not independent due to his personal relationship with the CEO. Includes Murdoch.
Analysts expect support from influential proxy advisory firms ISS and Glass Lewis following the court's ruling. However, past re-elections of Tesla's directors have been carried out without any objections, with the support of more than 90% of shareholders, which poses a challenge.
To succeed, critics are expected to seek support from major mutual fund holders such as BlackRock (BLK) and Vanguard.
TSLA stock was down 2.85% in midday trading Friday.
